FAQ

All freelancers must complete a W9 form which is downloadable from the IRS website at www.irs.gov. Make sure your regular bookkeeping gets this so he/she can enter the tax identification number into Quickbooks. Freelancers must submit an invoice for payment on their services.

Where can I find a W9 form for a freelancer to complete?

Visit www.irs.gov to download a W9 Form. It’s a good idea to keep several of these blank forms nearby in a folder or save the PDF file to your hard drive.

I just hired a new employee, what do I need to do?

The new employee must complete a W4 form and I-9 form with copies of identification for your files. Fax the W4 to your payroll service representative and contact the payroll service to add the new employee to your next payroll run. If the employee is offered a benefits package, health insurance forms must be obtained from your broker or carrier and submitted. Also workers’ compensation and disability insurance policies will need to be updated to add the new employee.

Where can I find a W4 form for a new employee to complete?

Visit www.irs.gov to download a W4 form. It’s a good idea to keep several of these blank forms nearby in a folder or save the PDF file to your hard drive.

Do I need workers’ compensation insurance and where can I get it?

If you use a payroll service such as ADP or Paychex they can provide this insurance through various carriers such as St. Pauls Travelers or Zurich. However, the New York State Insurance Fund also provides this insurance regardless of whether you use a payroll service or handle your payroll manually. In any case a form is completed indicating number of employees and salaries, and the estimated number of freelancers you use. The premium is based on these figures. It is department of labor law that each company has workers compensation insurance for their employees. However if your company has only one or two principals, the principals can waive coverage for themselves. This insurance covers accidents while on the job.

Do I need disability insurance and where can I get it?

If you use a payroll service such as ADP or Paychex they can provide this insurance through various carriers such as St. Pauls Travelers or Zurich. However, the New York State Insurance Fund also provides this insurance regardless of whether you use a payroll service or handle your payroll manually. In any case a form is completed indicating number of male and female employees and salaries, with a maximum salary of about $17K allowed for premium basis. It is department of labor law that each company has disability insurance for their employees. We suggest also seeking a long term disability policy for yourself as a principal. This insurance covers accidents while off-premises – such as running down the block to Staples and you trip and fall and can’t work.

How can I manage my credit cards online?

Most credit cards allow you to register online with a user name and password. You will be able to download statements from previous months, printout out current activity, and make online payments from various checking accounts you assign. We recommend registering for online access because it helps your bookkeeper keep you records current on a weekly basis instead of having to wait for a statement, and making payments online is convenient. Some cards also email alerts when balances are high or a payment is due.

I’m tired or writing checks, how can I order computer checks?

We prefer using Deluxe Business Systems for printing computer checks. You will need to register online and provide bank address, routing number, and account number. You can pick a color and style of checks. This does not mean you can’t cut a hand check occasionally; do keep your wallet checks for that purpose when your bookkeeper is unavailable and you don’t know how to print checks from Quickbooks.

Can I pay bills online through my bank?

Most banks offer free online bill pay. Collect all your usual monthly vendor bills, login to your bank website, and enter each vendor’s information including your account numbers. Once this is setup, you can login anytime to pay the bills from your bank account. Your bank issues a check that is mailed directly to the vendor. This is NOT a wire transfer, so allow at least 5 days before due date. If you do pay bills online make sure you print confirmations for your bookkeeper to post the payments in Quickbooks.

It’s time for me to incorporate, where do I start?

If you have a lawyer or accountant, either one can help with the initial paperwork. However, there are companies like www.legalzoom.com that allow you to do it online. Firstly you need to decide on a name. Google is one way to search company name but there are services such as Thompson + Thompson that can do a name search. If you have several name options you’d like, speak to your lawyer or accountant, since many firms have software that can do the name search for you, and this is included in the price. Average incorporation costs about $500. This does not include the cost of the corporate seal which you will need. There are also other types of business entities aside from corporations, such as LLC or LLP. Talk to your accountant first before you go forward.

I’m a sole proprietor, do I need a business certificate?

We highly recommend getting a business certificate from the county clerk office of the borough you plan to do business in. The forms are available at any stationery store or from the publisher Blumberg located on White Street in Tribeca. You’ll need to do a name search first, and don’t write in the name on the form until you are at the clerk’s office because they will do a final check to make sure the name isn’t used already. Good idea to have some options. If you want to use your own name such as John Doe d/b/a John Doe that is allowed as long as there isn’t another company called John Doe. The cost is about $135 and you will leave there with a business certificate [a.k.a "doing business as" or "d/b/a"]. This enables you to open a bank account in your company name, but checks can be payable to either the company name or your name.

A former employee filed for unemployment insurance, what’s next?

You will receive a form that needs to be completed and signed indicating the last day the employee worked and their salary. Unemployment insurance pays that employee a set portion of their salary for a certain number of months. Although it’s called "insurance", that is rather misleading because it is actually more like a "piggy bank" of accrued money you have been paying the state department of labor through payroll. Now the former employee taps into that and sometimes can deplete or overspend what you have accrued. This will cause your premium rate to rise in the future and you may end up having to pay additional money to the state.

A vendor asked for my resale form, what is it and why do they need it?

A resale form is given to a vendor when you are making a purchase that you are not required to pay sales tax on because you plan to re-sell the item to your client and collect sales tax from them. For instance, and fine artist can purchase paint, canvas, and stretcher from a supplier without paying sales tax if he or she provides a resale certificate. In turn when the painting is complete and sold to a customer, the painter must collect the sales tax from the customer, which will then be paid to the state tax department. Be very careful with the use of resale certificates. You must have a tax certificate from New York State to be allowed to use a resale certificate. Resale certificate forms are available online at www.state.tax.ny.us for download as PDF.

I collect sales tax, what is the current rate?

The NY State sales tax rate is 8.375% but you should visit the state tax website www.state.tax.ny.us to confirm as the rate does change and our website is not always updated promptly. For beauty services such as hair or makeup the rate is 4%.

I collect sales tax, what do I need to do with the money?

We suggest you place the sales tax collected into an interest earning account until the time comes to file your sales tax return and pay it to the government.

I collect sales tax, do I need special documentation?

Yes you must apply for a tax certificate which will assign you a special tax number [different from your tax identification or social security number]. Keep this certificate in a safe place and document the number on your resale forms that you provide to vendors when you don’t pay sales tax.

What is a 1099 MISC form?

A 1099 MISC form is given to freelancers to show what their annual earnings are from your company. Since they are not employees, and no payroll tax is collected, the gross you paid during a calendar year gets reported on this form. The forms are mailed out by January 31 so that freelancers can use it to file their income tax. If you are also a sole proprietor, expect to get these from your clients as well for your own income tax return.

What is the minimum a freelancer can earn in a year that requires income reporting?

If any freelancer earns $600 or more from you, they must be issued a 1099 MISC form indicating the total in checks or cash they have been paid, including expense reimbursements. But please consult your accountant first regarding expense reimbursements.

I’m ready to use a payroll service, what do I do?

We prefer Paychex and ADP for payroll processing. You can contact either company who will assign a sales rep to you, and will send forms for completion. Most companies run payroll twice a month, but you can decide if you want it monthly, or weekly. It’s more expensive to run payroll more times, so consider that. The payroll company will collect all payroll tax and send it to the appropriate government agencies. This saves a lot of time because you don’t have to do anything. Payroll can be setup automatically or by call-in.