I've been a sole proprietor in architecture/design for over twenty years. [1]
1. Have separate savings and checking accounts for the business and run all the money through them. It is typically easier to set these up as a sole proprietor because the personal liability works in your favor with regard to the bank.
2. Use separate credit cards for purchases, but to a first approximation don't purchase anything for which you cannot invoice a client...i.e. you don't need a new Macbook Pro and you definitely don't need to spend time pretending that shopping for one is work.
3. Generally, if you "incorporate" an LLC is the way to go because you don't necessarily have to pay yourself a salary (check with an accountant) and can just disperse money to yourself much like with a sole proprietorship.
4. Also check worker's compensation laws in regard to sole-proprietorships, LLC's, and S-corps. This is a place where I've seen people run into trouble.
5. General advice, contracts matter, but client relations matter more. You probably don't want to lawyer up to enforce some term of your contract. You're better off stopping work when you don't get paid quickly and that means having prompt payment terms in your contracts. It's even better to require a retainer payable against final invoice.
Good luck.
[1]: Architects have personal liability for errors and omissions in projects under their seal and because that is the vast majority of my liability and because an LLC/S-corp only protects against contractual liability and that is rarely an issue due to common clauses in industry standard contracts, I've never bothered with a corporate entity. YMMV.
> 4. Also check worker's compensation laws in regard to sole-proprietorships, LLC's, and S-corps. This is a place where I've seen people run into trouble.
Can you say a little more about this? What issues would someone acting as an independent consultant have with worker compensation laws?
1. Have separate savings and checking accounts for the business and run all the money through them. It is typically easier to set these up as a sole proprietor because the personal liability works in your favor with regard to the bank.
2. Use separate credit cards for purchases, but to a first approximation don't purchase anything for which you cannot invoice a client...i.e. you don't need a new Macbook Pro and you definitely don't need to spend time pretending that shopping for one is work.
3. Generally, if you "incorporate" an LLC is the way to go because you don't necessarily have to pay yourself a salary (check with an accountant) and can just disperse money to yourself much like with a sole proprietorship.
4. Also check worker's compensation laws in regard to sole-proprietorships, LLC's, and S-corps. This is a place where I've seen people run into trouble.
5. General advice, contracts matter, but client relations matter more. You probably don't want to lawyer up to enforce some term of your contract. You're better off stopping work when you don't get paid quickly and that means having prompt payment terms in your contracts. It's even better to require a retainer payable against final invoice.
Good luck.
[1]: Architects have personal liability for errors and omissions in projects under their seal and because that is the vast majority of my liability and because an LLC/S-corp only protects against contractual liability and that is rarely an issue due to common clauses in industry standard contracts, I've never bothered with a corporate entity. YMMV.