Ask FreelanceSwitch: Business Structures and Working with Agencies

In this issue of Ask FreelanceSwitch, we look at contacting agencies for work and business structures. Ask FreelanceSwitch is a regular column here that allows us to help beginners get a grip on freelancing. If you have a question about freelancing that you want answered, send an email to askfreelanceswitch@gmail.com.

Question 1

I’m a seasoned video editor in the advertising and marketing fields (15 years) but until now I’ve only freelanced for one stretch of my career. Otherwise its been all full-time employment. My question is this: I’ve made some great contacts with agencies in town, mostly through referrals and common acquaintances. I’ve emailed samples of work, resumes and rate sheets but my phone is still quiet. I am wondering is it uncool to call contacts back and ask if there’s work available? Or is this just being desperate?

Thanks
B

The problem that I’ve found with contacting agencies out of the blue is that most of them have a group of freelancers that they work with on a regular basis. Unless something comes in that their regular freelancers can’t handle, it’s tough to get them to send work along to you. Unfortunately, a follow up phone call may not change things — although I don’t think that making that phone call will necessarily make you look desperate.

It may be time to put a new spin on things. With your experience and expertise, what can you offer agencies that they aren’t going to get from their run of the mill freelancers? Maybe you can put together a a special package that will help them more with their clients or a service that’s beyond what the typical freelancer is offering — which, in turn, gives you a very good reason to call back your contacts and update them.

Question 2

Wondering about pros and cons here as far as what’s best for taxes, paperwork, billing, etc. … should I start an LLC or a sole proprietorship or neither or what?

Thanks!
-Mike

For most freelancers, a sole proprietorship is the best option. That’s because there’s a lot of paperwork and added expense that goes along with an LLC that, frankly, most freelancers just don’t have the time to deal with. You pretty much automatically have a sole proprietorship the moment you start taking on freelance work. Either way, your billing won’t be impacted — although there are some ways to improve your tax situation with an LLC, provided you’re earning enough to hit the higher tax brackets.

If you’re doing something beyond run of the mill freelancing — like selling a product — or there’s concern about liability, it may be worth looking into an LLC. Since the rules and regulations governing LLCs differ from state to state, it’s important to consult an expert (like a CPA) before starting the paperwork, even if you’re going to use one of those inexpensive online filing services to set up an LLC.

I do want to remind you that I’m not a lawyer or an accountant (I don’t even play one on TV). Because everyone’s tax situation and business are difference, it is a very good idea to consult a pro before making a final decision.