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