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Forming a Company2:15 with Pasan Premaratne
Now that you have a good understanding of how to run your business, it might be time to make it official and create a company. There are many good reasons to create a company and we will go over the ones that are relevant to freelancers.
[How to Freelance with Pasan Premaratne] 0:00 [Creating a Long Term Business] 0:02 Now that you have decided to continue freelancing long-term, 0:05 it may be time to make it official and create a company. 0:07 There are lots of reasons why starting a company may be good for you. 0:11 First up: Legitimacy. 0:14 A lot of freelancers like the idea of forming a company 0:17 to seem more legitimate. 0:20 Forming a company's structure around your business 0:22 makes your business seem more official. 0:24 Sometimes clients prefer to work with established businesses 0:27 rather than an individual. 0:30 And creating a company can help you get that status. 0:32 Then there's finances. 0:35 When running a freelance business, or any business, for that matter, 0:37 it's always a good idea to keep your personal finances separate. 0:40 Forming a company and keeping all your 0:44 business expenses within the company 0:46 will keep your personal finances safe and free of any confusion. 0:48 Liability. 0:53 If you run your freelance business as an individual and owe people money, 0:55 they can come after your personal assets. 0:58 Certain company structures offer liability protection 1:02 by keeping your personal assets separate from the company's assets. 1:04 In fact, this liability protection is probably 1:08 the number 1 reason freelancers choose to create a company 1:12 rather than to continue as an individual. 1:15 As you grow as a freelancer, you might want to hire 1:18 some people of your own. 1:20 Having a company structure will allow you to do that properly, 1:22 get payroll, employment taxes, and all that good stuff. 1:25 Now, that's a future consideration, 1:29 but it's one of the reasons we would go about forming a company. 1:30 If one day you do have employees, 1:33 then the liability protection offered by a company 1:35 becomes even more important. 1:38 You may be able to carefully control your actions so that 1:40 you don't incur any liability, 1:43 but you can't always keep an eye on your employees and their mistakes. 1:45 Then we have taxes. 1:48 Now you can certainly file your taxes as an individual when running a company, 1:50 but there are certain advantages to doing so as a business. 1:54 This depends on the type of structure you choose and the benefits that come with it. 1:57 Now these are all great reasons to start a company. 2:02 and you should take time to understand if they apply to your scenario as well. 2:04 In our next video, we'll take a look at the types of entities available to us 2:08 once we've made the decision to form a company. 2:12
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