Author Topic: investment accounts for freelancers?  (Read 1481 times)

fidgery

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investment accounts for freelancers?
« on: July 28, 2013, 05:59:26 PM »
Right now I have a full-time job, but I'm doing some freelance work on the side and looking to expand that with the eventual goal of building enough freelance business to stop needing my day job. What I'm wondering is: can freelance income be put into a retirement account pre-tax? Would I need to be incorporated as a business to do that? Or should I just pay tax on all my freelance income and use a Roth IRA/investment accounts not intended for traditional retirement?

Jamesqf

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Re: investment accounts for freelancers?
« Reply #1 on: July 28, 2013, 06:18:51 PM »
Sure.  The simplest way is through a traditional IRA.  You can also set up an individual 401k plan (Google "self-employed 401k"), and there may be other options.

allspiritseve

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Re: investment accounts for freelancers?
« Reply #2 on: August 01, 2013, 05:24:55 AM »
Freelance income can be put into a tax advantaged retirement account. You do not need to be incorporated as a business, though I would highly recommend forming an LLC especially if you're planning on turning the business into a full time career.

Forming an LLC is actually really simple. In Michigan it's a single page and $50 to form an LLC, and I would bet it's just as easy where you live. It's better to form one sooner rather than later, for liability purposes and for demonstrating a reliable income history if you're ever applying for a business loan, etc.

That being said, I prefer Roth IRAs over traditional IRAs.