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55
Why doing business with family might not be such a bad idea

How many of us have heard the expression that we “shouldn’t do business with friends and family?” As someone who once subscribed to this idea, I now realize just how wrong I was. My mother is my de facto personal assistant; my cousin designs our company t-shirts, and my brother has referred so many people that he has VIP status.



Their presence in my business life has made an incredible difference. My output is greater;

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I have generated new leads; and I have had a chance to meet and network with new clients. Just this past year, one of my former students, turned friend, starting working on projects with me.



Much like my experience with my biological family members, working directly with my friend has been an amazing experience. She is detail oriented, highly skilled, and flexible. In a fast-paced industry with tight deadlines and a diverse clientele, she has been an ideal addition to my team.



But what if I had dismissed her or my family members as potential team members simply because we are friends and family?



Why not work with family?

This question made me wonder: Why are some of us so quick to disqualify family and friends as potential clients, customers, and even business partner? I even tried to trace back to where my stance came from, considering the fact that I haven’t had any overtly negative experiences.



I guess I, like so many others, have heard so many cautionary tales from other entrepreneurs that I thought I was protecting myself.



But protecting myself from what?



Just as many of us would welcome a new client, a total stranger, on the assumption of good will, we need to think about how our friends and family may also be wonderful resources and ambassadors for our business endeavors. With an open mind, you may even find your next business partner at Thanksgiving dinner.



The importance of boundaries

The key is being clear about the line that you draw between your business and personal spheres. It may seem odd at first, but you want to make sure that you use the same safeguards that you would with others, including contracts where applicable. It is also important to talk about expectations up front.



Of course, it is perfectly feasible to offer a Friends and Family discount, but just make sure that it is an amount that you are comfortable with. Friends and family members who are serious about supporting you will respect your boundaries. They will also accept your policies and procedures.



Sometimes, they can become your biggest cheerleaders as they spread the word about your business with their networks and share your work with others. I have literally seen people expand their businesses exponentially because of their ability to work collaboratively with their kinship units.



The one advantage of potentially working with people who you know very well is that you can vet them before you do business with them. Drawing from past experiences and interactions, you can probably determine if it really is a good idea to proceed in a business-like capacity.



Know what you're getting into

The ones who are not able to respect your boundaries or who don’t have the work ethic that you desire are simply not good candidates to do business with. Because no transaction is worth severing familial bonds and friendships, if you are in doubt or not sure, it’s best not to move forward.



Even with the possibility that some familial transaction will not be positive ones, don’t miss out on potential business relationships that can have positive outcomes for everyone involved. You may want to start with one or two people to figure out how, or if, it will work for you. And you may even want to spend extra time prepping family and friends because they are familiar with you in a personal context, but they may not be familiar with you as a business person or as an employer. Remember, by drawing boundaries, you are protecting all parties involved.



Try it out

Still not sure? Well, if you have been hesitant before, give it a try!



Whether it is serving as a referral, a client, or even a partner, remember that family members and friends can turn out to be tremendous assets.



35
Happy holidays–updated meal and entertainment deduction rules are here

This is a post from a member of the Freelancers Union community. If you’re interested in sharing your expertise, your story, or some advice you think will help a fellow freelancer out, feel free to send your blog post to us here.



If you are keeping track of the rules related to the Tax Cuts and Jobs Act (TC

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JA) that are likely to impact you as a freelancer, you’ll want to take note of this one in regard to meal deductions. At the beginning of the year, it looked like the IRS was not going to allow the deduction of 50 percent of food and beverage expenses associated with business operations.



However, this rule was recently clarified to confirm that you can continue to deduct meal expenses as long as they meet the specific guidelines for such deductions.



The good news for freelancers

This is good news for freelancers, especially if you are planning to host client meals this holiday season and for any of the business meal expenses that you may have racked up throughout the year (as long as you have receipts).



Keep in mind, however, that expenses for entertainment, amusement, or recreation in the course of business are not deductible. For example, if you want to treat your client to dinner plus tickets to a show, only 50 percent of the meal expenses would be deductible.



What you can deduct

You can deduct client meal expenses, but they have to be legitimate. As a refresher, here are the requirements for being able to take advantage of the meal expense deduction on your freelance business tax return:





The meal expense must be reasonable and a necessary as part of your business operations.

Either you, or an employee of your business, must be present when the meal is eaten.

The food and beverages you are claiming must be provided to a current or potential business customer, client, consultant, or similar business contact.

If food and beverages are provided during or at an entertainment activity (i.e. brats and beer at a baseball game) they must be purchased separately from the entertainment on one or more bills, invoices, or receipts.



...and what you can't

In case you were wondering, you cannot try to pass through the cost of any entertainment as a deduction by claiming that the meal or food and beverages you provided is greater than it really was. In addition, you must have receipts to support your meal expense deductions (not just a credit card statement) so be sure to keep those filed with your other tax information.



Beware of the new IRS view on de minimis meal expense deductions for your business.



Aside from the above meal expense deductions, it is important to remember that under the tax reform laws, significant changes to the amount you can deduct for de minimis meal costs were also made.



These expenses related to meals provided on premise by companies to their employees are considered a form of de minimis or “fringe” benefits by the IRS. Typically, de minimis benefits are characterized by a) their low value (a good rule of thumb is the expense is less than $100) and b) the relative infrequency with which they are offered.



It used to be that de minimis benefit expenses were 100 percent tax deductible as a general business expense and included items such as occasional snacks and refreshments provided to employees by an employer or the infrequent provision of money for meals by an employer when employees are working overtime.



Not anymore.



The TCJA gradually eliminates these deductions. Starting in the 2018 tax year, the deduction businesses can claim for de minimis meal expenses is reduced from 100 percent to 50 percent. By the 2025 tax year, the ability to deduct these costs is completely eliminated.



In addition, starting in the 2018 tax year, the current 50 percent limit on the deductibility of business meals by individual taxpayers expands to include businesses. This means that any meals provided by businesses on their own premises, such as at a company cafeteria, holiday party or employee picnic—as well as any related operating costs—are no longer 100% deductible. This year only 50 percent of these costs may be deducted by businesses and in 2025 no deduction for these expenses can be taken.



So there you have it—some good news and some not so good news about meal expenses for your freelance business. If you plan to take clients out to eat or to bring treats to the office during the holidays, keep your receipts in your tax file and the above TCJA provisions in your mind.



Jonathan Medows is a New York City based CPA who specializes in taxes and business issues for freelancers and self-employed individuals across the country. He offers a free consultation to members of Freelancer’s Union and a monthly email newsletter covering tax, accounting and business issues to freelancers on his website, www.cpaforfreelancers.com which also features a new blog, how-to articles, and a comprehensive freelance tax guide.



Jonathan is happy to provide an initial consultation to freelancers. To qualify for a free consultation you must be a member of the Freelancers Union and mention this article upon contacting him. Please note that this offer is not available Jan. 1 through April 18 and covers a general conversation about tax responsibilities of a freelancer and potential deductions. These meetings do not include review of self-prepared documents, review of self-prepared tax returns, or the review of the work of other preparers. The free meeting does not include the preparation or review of quantitative calculations of any sort. He is happy to provide such services but would need to charge an hourly rate for his time.



8
Help us shape the future at Freelancers Hub!

The first ever dedicated space for freelancers is coming to Brooklyn in October!



Freelancers Hub will offer educational workshops, community coworking events, thought leadership panel discussions, and services to serve the needs of freelancers in NYC.



And you can be a part of the action! Make your mark at Freelancers Hub by

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KLFrg7zOTeyIgw/viewform">submitting a workshop proposal that could be part of this year’s inaugural programming.



We are looking for knowledgeable and passionate instructors that know what it takes to thrive as a freelancer to teach at NYC’s first dedicated space for freelancers. The strongest workshop proposals should have a clear title and description, an interactive format, and concrete takeaways articulated in their pitch.



Don’t miss your chance to be part of this exciting time at Freelancers Hub and put your hat in for a chance to share your knowledge and expertise with the rest of your freelancing family.



Submit a proposal here!



6
Freelancers Hub is launching in Brooklyn–and you’re invited!

Freelancers Hub, our groundbreaking space just for freelancers, is launching next week in Brooklyn–and you’re invited to the launch party!



Please join Freelancers Union, Made in NY Media Center by IFP, and The Mayor's Office of Media and Entertainment on Wednesday, October 17 for an evening of community. We’ll be ce

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lebrating with drinks and light snacks, as well as free headshots, games, and freelancer-friendly giveaways. Bring a friend–or three!



RSVP here!



Freelancers Hub is the first space of its kind in the country–a freelancer-focused community center offering free coworking space, legal help, benefits assistance, workshops, and more. We can’t wait to have you over.



Learn more about Freelancers Hub and check out our fantastic lineup of fall programming, including legal clinics and support with health insurance Open Enrollment, at freelancershub.nyc.



Freelancers Hub is operated by Freelancers Union in partnership with the Made in NY Media Center by IFP and the Mayor’s Office of Media and Entertainment.



RSVP here!






47
What does it mean to be an independent contractor?

I have been an independent contractor and now, in my capacity as a small business owner, I hire independent contractors on a project by project basis. Having sat on both sides of the table, I understand how being an independent contractor can be confusing, so before you sign on the dotted line, here are a few questions to ponder:



What is an independent contractor?

As independent contracting is becoming a more popular me

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ans of employment, it is important to have a clear understanding of how it is defined. According to the IRS:



“People such as doctors, dentists, veterinarians, lawyers, accountants, contractors, subcontractors, public stenographers, or auctioneers who are in an independent trade, business, or profession in which they offer their services to the general public are generally independent contractors. However, whether these people are independent contractors or employees depends on the facts in each case. The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. The earnings of a person who is working as an independent contractor are subject to Self-Employment Tax.”



I strongly recommend that you review the IRS’ website on the difference between being an employee and an independent contractor. Recent cases against Uber and Lyft in the state of California, in particular, have led to challenges over employment status misclassification. As such, California and other states have implemented an “ABC” test.



In California, workers are considered employees unless:





The worker is free from the control and direction of the hirer in connection with performing the work

The worker performs work outside of the usual course of the hiring entity’s business

The worker is usually engaged in an independently established trade, occupation or business of the same nature as the work performed for the hiring entity



If you are unsure as to whether the position that you have been offered is really that of an independent contractor or an employee, check your state’s labor laws and if possible, consult with legal representation. Your employment status is important for several reasons, mainly because it can have long-term implications, especially as it relates to paying taxes.



Are you prepared to pay taxes?

As the aforementioned description explains, independent contractors have quite a bit of autonomy. The thought of working on a project for weeks or months at a time as a project status worker may sound ideal, especially if you dislike the idea of working for the same company over an extended period of time.



However, if you have never been an independent contractor, it is important to understand that your compensation does not factor in Social Security, Medicare tax, unemployment insurance, local, state or federal taxes. So, if you are accustomed to having everything taken out of your check for you by a conventional employer, you may want to think about how you plan to save for taxes.



Let’s admit, the idea of earning an exact amount is appealing, but remember this is your gross pay. In other words, it is taxable. So, if your compensation is $10,000.00 for a contract, remember, it is subject to taxation.



The easiest way to adjust to independent contractor status is to put away the money that is taxable. You may even want to open an account that you use just for the purposes of paying taxes. This will save you the heartache of not being prepared when it is time to pay the IRS.



Are you prepared for the end of the contract?

The duration of an independent contracting project is usually pre-determined. Many businesses rely upon project managers to help them determine throughput rates and reasonable deadlines. Because of this, many contracts will have approximate start and stop dates. These are often determined by volume and budgetary allocations.



If you are relying upon such contracts as the primary means for your income, then you don’t want to get too comfortable. You also don’t want to assume that you will have multiple opportunities to work on projects for the same company.



I highly recommend that you stay abreast of other opportunities and that you are preparing yourself for the next contract. Because you are not an employee, you also have the right to work on several other projects.



Being an independent contractor is a great way to experience job stability without feeling restricted by working for a singular entity. However, it is not for everyone. There is an element of unpredictability, and it is probably too stressful for those who are risk-averse.



My advice: Before you venture into the realm of independent contracting, make sure that you learn as much as you can about the position and whether or not it is a good fit for you.



26
Is your income protected?

Episodic income is one of the biggest challenges freelancers face. As freelancers know all too well, when you’re too sick to work, you don’t get paid.



Until now.



Freelancers Union is thrilled to offer freelancers in Georgia exclusive access to Trupo, a brand-new short-term disability insurance product for freelancers. It will be coming soon to freelancers around the country! Enter your zip code to see if Trupo is available in your area:



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Trupo was started by Freelancers Union founder Sara Horowitz and it represents an important step in building a new safety net that works for freelancers.



Here’s how it works:





You pay a monthly premium depending on your income level and line of work

If you’re ever too sick or injured to work for more than a week, you receive checks for up to half of your income



We’re excited to be partnering with Trupo to offer this exciting new option for freelancers. We hope you’ll sign up and be a part of an innovative solution that helps freelancers thrive. You can also join Trupo’s Facebook group and follow #Trupo on Instagram and Twitter.