For the love of acronyms like SBDC, HSA/HDHP, and SMLLC

21 Jun

one of life's absolutes

Since deciding to take what has been very part-time, freelance writing work over the past many years and make it my full-time job, I’ve been focusing exclusively on expanding my client base. And, so far, it’s working. Which is SO AWESOME THAT I AM ALMOST AT A LOSS FOR WORDS. Which would, if that happened more often, render me rather useless as a copywriter.

So now that I have agreements in place, I am starting to turn my attention to those very important details that go along with running my company — most notably, making sure I’m straight on taxes and insurance.  Hooray!

To that end, I went to the library and bought several books and began reading them ravenously when I wasn’t at meetings… or when I was waiting for people to show up to meetings… or after meetings while I was enjoying the freedom of NOT having to “go back to the office.” Then I started asking people who own small companies like mine to tell me intimate details about how they’re set up. Surprisingly, I found that people were more than willing to help. Also surprising was how overwhelming it can be; I’d been so focused on getting work rolling in that when I decided “Ok, it’s time to get my ‘paperwork’ in order,” I wasn’t sure what was *right* for me and my business.

So, this week has been a pleasant crash course in several acronyms that I had never heard before. Thanks to some friendly young entrepreneurs like John Feminella of Distilled Brilliance, Nick Whitmoyer of whitmoyer.com, David Panarelli of OpentheWindow, and Josh Sundquist of … well … himself, I learned of the amazing resources available **for free** through the SBDC, that I could push some of my earnings to a tax-free savings account AND simultaneously take care of myself through an HSA/HDHP, and avoid filing tons of unnecessary paperwork while I’m still the sole employee of stephaniehay.com by setting myself up as an SMLLC.

These are three things that I expect other individuals might find valuable after they, like me, decide to take the plunge into self employment. So here’s more about what I’ve learned:

SBDC: Office of Small Business Development Centers, Entrepreneurial Development

Through the SBA, pro bono resources are made available to people who, like me, are starting their own businesses. I met with a counselor one afternoon, for free, for an hour, to ask him all sorts of questions that I’ve been asking myself, from tax questions to seemingly benign ones, like “Does it really matter that I’m a woman-owned business to anyone outside of the government?” (His answer: Not really.) He asked me lots of questions, too, and gave me recommendations (not directives) based on my answers to his questions. It was an interactive, informative, and comfortable discussion. This week, I’ll be meeting with a CPA and a lawyer. Each will review the choices I’ve made so far and the contractual documents I’ve got in place… then tell me if I need to change anything given my short- and medium-term goals. Sweet!

HSA/HDHP: Health Savings Account-Qualified, High-Deductible Health Insurance Plan

Here’s the bottom line: I am healthy, active, and financially conservative. So I’ll get a high deductible health insurance plan through someone like CareFirst BlueCross BlueShield, then set up a health savings account. When I get paid by clients, I’ll push some of that payment to my HSA. Then, when I have to visit a doctor and the person at the front desk on my way out tells me how much my visit costs, I shall triumphantly hand over my HSA card and bingo bango, I’m paid using pre-tax dollars from my earnings. “Pre-tax” you say?  Yes!  The government doesn’t tax money you’ve pushed throughout the year to your HSA. That means that although I’ll have less money coming into my pocket each time I get paid, I’ll have MORE money that isn’t being taxed. Rad!

SMLLC: Single-Member Limited Liability Company

Once I grow beyond my own capacity and have the chance to hire Bronwen Taylor to be my chief creative writer, thereby continuing to expand my business, I will (obviously) be beyond my current single employee status. But, until then, I can simply file the one tax document at the end of the year (which I have been doing up until now) PLUS a Schedule C.  Then I’m done.  Though, really, when I say “I” in those statements, I’m really referring to Craig Alden, the greatest investment advisor and tax return guy on the planet. I’ll file taxes each month when I get paid to lesson the blow at the end of the year, and I still have an Employee Identification Number (EIN – acronyms everywhere!) and am awaiting my state-recognized designation as an LLC so I can set up a second bank account that’s quite separate from my personal account. How official!

It’s been a thrilling few weeks so far to be making this official after years of doing it part-time. I hope I haven’t misrepresented anything, but if I have, please let me know.. and forgive me, I’m still relatively new at this.

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