Sole–Proprietor or LLC?

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Note: This episode contains legal advice. We recommend you consult a lawyer before making legal decisions in your business.

On today’s show, Molly Cox calls in with questions about the freelance business she started just six months ago. Top of mind for her

Should she stay a sole–proprietor or form an LLC? Before the legal terms tempt you to click away, consider this: this single question could save you thousands of dollars a year in taxes.

Key Takeaways from this Episode:


  • Consider your business goals and risk tolerance. Molly should think about what she hopes to achieve with her business and how much risk she is willing to take. If she is concerned about being sued, then an LLC may be a good option.
  • Do your research. Molly should learn more about the different business structures available and their pros and cons. She can also consult with an attorney or accountant to get more specific advice.
  • Get professional help if needed. Setting up an LLC can be complex, so Molly may want to hire an attorney or accountant to help her.
  • Don’t be afraid to ask questions. There are many resources available to help Molly make the best decision for her business. She should not be afraid to ask questions to get the information she needs.

Episode Transcript

This transcript was auto-generated and may have grammatical errors.

00:00.00
Preston Lee
Welcome back to another episode of freelance to founder. My name is Preston Lee with millo.co and joining me on the air today is my friend Clay Mosley from GetDripify.com hey clay feeling good feeling good about this one. It’s good. Where.

00:08.19
Clay Mosley
Hey how’s it going feel good Ben yeah film. Good.

00:17.74
Preston Lee
We’re feeling good because Molly’s here joining us as well. Molly I didn’t catch before we hit record where you’re calling from.

00:23.60
Molly
Um, I’m in Bethesda Maryland which is just outside of Washington d c.

00:28.55
Preston Lee
Love it. Welcome to the show Molly and thank you so much for taking the time to call in. Yeah, we were talking before we hit record that you were you were thinking about it for a while listen to the show for a little while and um, hopefully by the end of your episode today. You can you can tell everyone how not scary it is you don’t.

00:30.64
Molly
Thank you.

00:46.20
Preston Lee
You don’t have to to come on the show like Molly has today. You don’t have to have like this giant business or have been in business for years and years. In fact, we love helping people who are just getting started. Um and we just love no matter what stage you’re at we love helping you overcome that next hurdle in your freelance business on your way to becoming a founder of your own business. So. Molly thanks for having the courage to jump on the on the call today. We’re really not that scary and we look forward to chatting with you about your business. Why don’t you tell us? Um, why don’t you tell us just about you about your business about your clients and and kind of where you’re at right now in your freelancing.

01:20.31
Molly
Sure, um, so I am mainly a proposal writer and editor. Um I’ve been freelancing since about January of this year after quitting my w 2 job. Where I was a senior proposal writer and editor for a federal government contracting company and so um, still my main client base is federal government contracting companies usually small businesses. Um, small by.

01:38.72
Preston Lee
I.

01:52.16
Molly
Government contracting standards not necessarily what we would think of as a really small business. Um, and as well as um, you know, just different nonprofits different industries which has been really, um, interesting and exciting because I get bored doing the same thing and so it’s really interesting to.

01:53.83
Preston Lee
So yeah.

02:11.88
Molly
You know, learn about different businesses and what they do So I’ve really enjoyed that so far. Um, yeah.

02:14.97
Preston Lee
I Love it. So let me make sure I’m understanding what you do so in in proposal writing I assume you sit down with the client and the client wants to make a proposal maybe in in an example like they’re sending a proposal to the government to to try to win a a project or something.

02:32.38
Molly
Ah.

02:33.25
Preston Lee
And and so they maybe give you all the information and you write it out in a clear concise way that increases their chances of winning that bid is that kind of what the work you do.

02:44.44
Molly
Yeah, essentially and there’s usually um, you know a pretty tight timeline and the federal government has really strict requirements for what goes into a proposal. So if you miss.

02:50.49
Preston Lee
Um.

02:57.17
Molly
1 small thing it might get thrown out and not even read and you’ve spent all of that time and work and effort and your proposal doesn’t even get looked at so having someone who’s a professional proposal writer come in. You can make sure that it’s compliant which is a big word in our industry.

03:00.30
Preston Lee
Mm.

03:13.57
Preston Lee
Yeah.

03:15.33
Molly
Ah, you’re submitting a compliant ah proposal. That’s also compelling so interesting to read ah answers All of the government’s questions. Um and you know wins Hopefully the business.

03:28.71
Preston Lee
yeah yeah I love it and how long have you been in business you said just first of the year right? were you were you? So it’s June right now time of recording and and um, so first of this year have you did you do it on the side at all before or or is this.

03:32.30
Molly
And yep.

03:43.99
Preston Lee
Your first foray into working for yourself.

03:47.13
Molly
Um I didn’t do it on the side before although I have had many different odd jobs over the course of my career. Um, but I I was just ah, just a full time. You know Proposal writer for one company.

03:54.64
Preston Lee
Who.

04:04.10
Molly
And um, just got you know, kind of burnt out. Ah at that and decided you know I wanted to take some time off and then after that um I had been getting a lot of outreach on Linkedin. Um, from businesses about um, new full-time positions and I thought you know maybe I can just do this. As a freelancer instead and that’s been successful so far.

04:24.84
Preston Lee
Um I love it have you been able to convert any of those people reaching out on Linkedin into freelance clients or jobs I’m just curious because some people have been able to do that with great success.

04:39.39
Molly
Yes, yeah I I get a lot of you know, cold outreach on Linkedin from recruiters and I’ll always tell them. Um you know, thanks so much for reaching out to me I’m not interested in. You know, a full-time position.

04:45.57
Preston Lee
Um, yeah.

04:53.20
Molly
At this time. However, if you’re interested I Also you know do some consulting work and would love to speak with you about that if you’re interested and usually they they are. They don’t always hire me. Um, just because they’re some. Maybe they’ve never used ah a consultant or a contractor. But um, yeah.

05:03.20
Clay Mosley
And.

05:11.59
Molly
Ah, it has been successful.

05:13.39
Clay Mosley
That’s a great way of um, kind of nonintrusive sales. You know? Yeah, it really is.

05:19.23
Preston Lee
It’s really inbound sales. Yeah yeah, we had a whole episode I think we ended up titling it clients hiding in plain sight. Um, and it was all about that someone I’m trying to remember who it was and I may be able to pull it up here while I talk but um. Remember someone was getting tons of inbound inquiries on Linkedin and they started converting that into let’s see Jim Jim yeah we had Jim on and anyway started converting that into to clients and.

05:40.79
Molly
Ah, her.

05:46.34
Molly
Oh.

05:51.47
Preston Lee
I love just the idea of like always keeping your eyes out. Some people are like oh I just get so many Linkedin requests and it’s like well could you leverage that you know could you use that to your advantage. So good for you. That’s great. Yeah.

06:02.50
Molly
Yeah I respond to all of them. Um, one way or another so and you know even if you can’t work with somebody at the time people will circle back around. So.

06:12.53
Preston Lee
I love it. Well, let’s talk about where your business is headed then we have kind of an idea of what your business looks like so far. Thanks for sharing that with us. Every time we have a guest on like Molly today we ask you to fill out a short questionnaire and um on that questionnaire we ask you to rate on a scale of 1 to 10 where you are currently and where you’d like to be 1 being You’re completely a freelancer 10 being. You’re a founder of a company running a company systems in place processes in place. The business can run without you that’s kind of what a 10 looks like. Um, in our book. But Molly you put that you’re currently at a 2 and you weren’t quite sure on the other end where you’d like to be a year from now you put that maybe a 5 would work for you. But why don’t you paint us a picture like if you could if you could.

06:48.82
Molly
F.

06:55.94
Preston Lee
If you could picture a year from now ideal scenario for your business. What does it look like so.

07:00.56
Molly
Um, you know I’m I’m not a hundred percent sure just because um I think like like I was telling you guys earlier before we started recording. You know I I don’t know what I don’t know and so I’m really um, kind of taking this year as my sort of. Exploration and experimentation year um to to see what works and what’s possible. Um, but some things that I definitely do know. Um, is that you know I want a steady you know stream of clients stream of income. Um. The ability to you know, take jobs that really align with my um, you know passions and interests and not you know, not just taking a job to take it not that I’ve done that I love all of my clients. Um, but just to be able to you know, maybe work with some. Really interesting. Ah, unique clients that I haven’t worked with before and then still have the flexibility to you know, take time off when I need and travel. Um, which is that was kind of you know my main motivation in the first place to become a freelancer so I don’t want to lose that.

08:05.28
Preston Lee
Yeah.

08:14.46
Preston Lee
Um, um.

08:16.17
Molly
Um, but also don’t want to leave money on the table.

08:19.11
Preston Lee
Yeah.

08:19.22
Clay Mosley
I congratulations to to to coming into the world of freelancing where you want to take all the time off you want. But in reality you’re going to work like crazy. Ah, ah.

08:30.30
Preston Lee
Ah, but that’s why we’re here right? because so many people so many people come into this like yes I’m going to have all this freedom and then if you’re not careful. Yeah, you totally just make another job for yourself and it may even be a more demanding job than you had before.

08:30.70
Molly
Um, yeah.

08:36.18
Clay Mosley
Yeah, yeah, yeah.

08:45.32
Preston Lee
Um, because not only are you doing the work. But now you’re running a business it just it can become really overwhelming and so I think clay is you’re you’re sort of joking clay. But but I mean it’s based in reality like that’s it’s a scary reality and so yeah, yeah.

08:56.59
Clay Mosley
Ah, it’s true I mean it happens it happens like eventually but you got to get past that hump you know.

09:04.95
Preston Lee
Yup, and that’s what we’re going to help Molly do today I think Molly why don’t you tell us maybe some of the hurdles that you see right in front of you that we could help you with to take your business to that level that you want to you know a little more freedom more passionate about your projects. More clients a steady stream of clients like where where do we start? What’s ah, what’s a hurdle you’re facing.

09:25.30
Molly
Um, so I think mainly at the moment um, having sort of inconsistent hours. So like sometimes I’ll you know be working 30 hours a week sometimes I’ll be working 0 hours a week. And it all you know evens out in the end and you know I um, do okay and you know make enough to get by but you know eventually I’d like to get to the point where I really can plan out my schedule a little bit more um as opposed to just sort of. Picking up things on like an emergency basis which you know happens a lot because people are calling me because you know they’re they’re down a person or you know they don’t have the right person and this proposal is due in you know, fourteen days or thirty days whatever it is um so I think with some of my um.

09:59.77
Preston Lee
Oh.

10:18.31
Molly
Ongoing clients that I’ve been working with the whole time I’ve been freelancing. Um I’m hoping to introduce. You know, sort of a retainer if they’ll go for it. Um to be able to say you know you guys have consistently used me um and my services for the past six months so like let’s let’s set up you know. Ah, sort of recurring system. Um, but I’m just really not that busy yet that I can kind of you know, turn down. Ah you know those sort of emergency kind of jobs.

10:50.39
Preston Lee
Yeah, okay, okay I love that. So so the question is like how how do you? Well you you tell me if this is right is the question. Um, how do I get busy enough that I can plan my work schedule a bit more and it’s less up and down.

11:08.12
Molly
And also um, you know if if folks are saying hey I really need you for this emergency. Um, it’s going to be full time. You know 80 hours for the next two weeks can you do it and I am like no but you know I could do 40 and then at the end of the day they only end up using me for 10 hours instead of the original eighty that they thought that they needed. Um, so that that disconnect I’m not real sure of I don’t know I wonder if it’s um, you know they they don’t quite know how to.

11:29.96
Preston Lee
Um.

11:32.24
Clay Mosley
So why is that? oh.

11:43.19
Molly
How to use me in the best way and they also want to you know limit the amount of hours even if they’ve already contracted me for a certain number of hours and it’s been approved so I’m not I’m not really sure.

11:50.67
Preston Lee
Um, so are you charging by the hour okay so that’s so that’s I don’t think clay and I will kick a dead horse on this episode. Um, there are.

11:51.91
Clay Mosley
And.

11:59.54
Molly
Um, yeah, that.

12:06.74
Preston Lee
There are lots and this isn’t this that wasn’t the dig at you at all Molly I’m just saying there. We’ve we’ve talked about this quite a bit lately on the podcast. So I’ll I’ll send you a few episodes or you could even just go back even in the last. What would you say clay like the last 5 to 10 episodes. We’ve probably touched on this 3 4 5 times. Um.

12:22.93
Clay Mosley
Yeah.

12:25.66
Preston Lee
Really in depth. But but let’s just let’s skim over it for you because I think I think that’ll work and then we can get it into some of these other questions that you have but but really quickly charging by the hour is going to do you a disservice. Um and you’re maybe seeing that a little bit already because you plan for 80 hours worth of pay or work. And they only employ you for 10 hours and then you only get paid for 10 hours now it might be that you’re so efficient that they thought they needed someone for 80 hours but you do such a great job but you get it done in 10 hours while the value is still there right? The value they hired you for the end result they hired you for still there.

12:55.57
Clay Mosley
And if.

12:58.37
Molly
4

13:00.30
Preston Lee
Just because you did it faster you as the freelancer shouldn’t be penalized for that and that’s what hourly charging does and so we would invite you to to look at your pricing that way and when someone calls you and says I’m in a huge emergency. First of all, that’s a great sales opportunity and we can dive into that a little bit later but I’m in a big emergency I need you for 80 hours you say.

13:02.59
Clay Mosley
Yeah.

13:20.24
Preston Lee
Great I don’t charge me the hour. But here’s what I do charge for you know these emergency type situations where you need help with a proposal I’ll charge you you know 5 grand or whatever and we’ll get it done. Um, then you then you don’t have to worry about like if I get it done sooner I get paid less.

13:26.85
Clay Mosley
Ahead.

13:37.98
Clay Mosley
What’s really gonna blow your mind. Molly is that client that was willing to pay you for quote unquote 88 hours of work. Let’s just say it was 5 grand and you only charged a thousand they’re probably sitting over there thinking man we got all that done for only $1000

13:54.90
Molly
Oh.

13:54.94
Clay Mosley
Like great but they were willing to pay 5 grand on I mean I I mean these are made up numbers. But.

13:58.67
Preston Lee
Yeah, so you’re missing out on all that extra pay because you you have to kind of start asking yourself like what what is the value to the client if they for example, if this proposal wins you know I don’t know how much your clients are getting out of a. Ah, 1 proposal but I would assume it’s a fair amount of money. Um, and so if you can leverage that if you say like okay, a proposal that Molly works on has ah you know 5 times more likelihood of winning then you can you can really charge for that. You know I mean.

14:18.48
Molly
There.

14:32.91
Molly
The hair.

14:34.71
Preston Lee
And and it doesn’t matter how many hours you put into it. It’s like the Molly stamp of approval.

14:41.70
Molly
Yeah I think um I have thought about that I’m I’m not sure how it would work just because from everyone I’ve seen doing this kind of work in the proposal industry that it has been you know hourly? Um, but. Yeah, something to look into I suppose and also the the other thing would be maybe for a certain amount of time like you know if you knew my help for a month but I guess I would just worry about you know the scope creep of like okay we’ve paid you $5000 and now we want you to do this this this and this.

15:11.27
Preston Lee
Yeah, definitely.

15:17.88
Molly
Because we have you until the due date of this proposal.

15:22.68
Preston Lee
Yeah, that that definitely is a risk. Um I would say first of all on the issue of everyone charging by the hour I think that that is a non-issue. Um, you know if you go back and listen to Clay’s story he started charging monthly for websites where most people were charging you you know charge upfront.

15:37.60
Clay Mosley
I swear I was the first one in the entire world to do that I swear to god I was.

15:40.60
Preston Lee
Ah, larger sum for for a website and so um I think.

15:46.00
Preston Lee
Ah, we will claim it and and and it worked like in a big way. Um, so I think I think changing up the pricing can actually lean in your favor. Um, you stand out from the competition. You’re a little bit different people pause and think about it. But um. On the other issue of of like scope creep I think you could just very easily easily set the scope or you could even you know you could even like test the waters on this and clay I’d love to hear your thoughts on this too I’m talking a lot I apologize. But I wonder if Molly you could set like a minimum like in order to book me. It’s a minimum. You know $3500 and if you want and then on top of that I charge. Whatever you know another thousand dollars a week again. All made up numbers. But um, then if they only employ you for 10 hours you’ve at least got your minimum amount out of it.

16:40.96
Clay Mosley
I Yeah, we used to do this on a believer or not back in the day I used to work construction. Um, and every construction crew like there’s there’s you know, like there’s just a certain. It’s not worth.

16:42.27
Preston Lee
Um.

16:59.70
Clay Mosley
Doing the job unless you hit a certain dollar amount. You know what I mean because you have overhead you have costs and things like that. Um, and so like for us like our our minimum job requirement was like a thousand dollars and so it didn’t matter how if it was an hour of work or 4 hours of work or 8 hours of work like the minimum was a thousand.

16:59.52
Preston Lee
Yeah, yep.

17:18.30
Preston Lee
Yep.

17:18.83
Clay Mosley
So I like that.

17:20.71
Molly
Um, okay yeah, I’ve also um oh sorry I thought about um, you know, maybe charging ah 20% upfront and then just.

17:21.10
Preston Lee
So that may be worth exploring.

17:35.49
Molly
You know, having like a non-refundable sort of deposit On. You know the total amount so like um, doing that and then you know that’s non-refundable. So like it’s a 20% deposit upfront I will bill my hours against that. But if you don’t use the whole amount then you’re not getting it back. What do you think about that.

17:57.12
Preston Lee
Yeah I think that’s another way that that would definitely work particularly if you’re seeing a very common trend like I don’t know if you sort of made those numbers up on the fly or if you quite often have someone book you for eighty and and and employ you for 10 You can start to figure out. Okay.

18:11.28
Molly
Yeah, no I just made that up.

18:15.87
Preston Lee
But you could start to look at those numbers right? and say like oh I really am you know one eighth of the time so that’s what twelve and a half percent so um you know I’m going to have a 20 or 25% non-refundable deposit so that I’m guaranteed at least. Yeah, you just you just have to work out the math. But I think that’s that’s a great way to look at it.

18:33.76
Clay Mosley
And I would respectfully ah disagree and let me tell you why anytime anytime you have to do math. You’re gonna lose somebody.

18:38.39
Preston Lee
Disagree That’s all right.

18:49.51
Molly
Yes, okay.

18:51.15
Clay Mosley
I Like no joke I mean even though that’s like simple math. But anytime you have to make somebody do math or you have to explain math that is friction to sale.

18:57.94
Preston Lee
Um.

19:00.67
Molly
No.

19:02.82
Preston Lee
Ah, it’s a good point. So like when because you’re saying you would say to the client. It’s gonna be 20% of 7 grand and they’re like well on 20%

19:09.89
Clay Mosley
Yeah, and then and then if you add on to like oh yeah, I’ll put it up against myll I’ll what did you say? Molly you said something like you’ll count your hours towards it and mobile bla and like now I’m like I don’t know what the f like I’m paying for.

19:17.79
Molly
I have.

19:24.74
Molly
Yeah.

19:26.50
Clay Mosley
Just forget it I’ll I’ll just go to the person next next in line who’s just going to charge me a flat fee.

19:26.58
Preston Lee
That’s a good point that. Yeah, the minimum payment basically gets you the same thing without all the math right? yeah.

19:34.14
Clay Mosley
Um, yeah, the math the math I love math. Okay, um, but it’s like math doesn’t make sense like in a sales in my opinion in a sales pitch.

19:34.72
Molly
Oh okay.

19:53.97
Clay Mosley
Like if you have to like date. There’s a difference between data and math right? like So if you if if the prospect has to do math in their head. You’ve lost them. That’s it So like avoid that situation.

20:04.48
Molly
And her. Okay.

20:09.76
Preston Lee
Yeah, and you and you can do the math on the backend in your business right? and say like if I want to book an average of 20% non-refundable deposit I’m going to need to my my base fee should just be $2000 or whatever.

20:24.23
Clay Mosley
Yeah.

20:26.82
Preston Lee
And then and then it all kind of evens out over the average of all your clients I like I like that I agree you you persuaded me clay. Ah, that’s exactly right.

20:31.40
Clay Mosley
Is It’s because the math confused you didn’t it. Ah ah like Ma let me ask you a question so like are your are the jobs that you do are they all pretty. Typical like the same process like same framework like over and over again I mean I know the words are different but like the process of the Frameworks the same.

20:49.96
Molly
Um I think yeah yeah I think so um.

20:58.52
Molly
Um, well it just depends on because I’m I’m working with the folks at the company Also so it depends on you know how many people on their team and how many meetings they have you know So I’m kind of like a part of their team for the the period that I’m working for them as well.

21:11.65
Clay Mosley
Ah.

21:14.51
Clay Mosley
Okay.

21:16.78
Molly
So it’s not just like I go off somewhere and write something and give it back to them. It’s like a really collaborative process and that’s a little bit different every time.

21:19.47
Clay Mosley
Yeah. Do you have a pretty good idea like if you were to do a a discovery call or Introductory call with them. Do you have a pretty good idea of like how long that project’s going to take.

21:34.70
Molly
Ah.

21:41.70
Clay Mosley
Based off your experience.

21:41.90
Molly
Um, well yes, because there’s typically a due date on the proposal. So it’s you know 30 days sixty days um two weeks yeah

21:52.13
Clay Mosley
Um, okay, well if that’s the case now I would just create packages I would create a a you know, not maybe not packages but I would just I would just do it like ah a flat fee.

22:06.62
Molly
Oh.

22:08.88
Clay Mosley
You know if it’s a 30 day thing somebody approached you and and you did a call with them and it’s like they’re due dates in thirty days like okay you have a thirty day whatever your thirty day fee is right? Um, or if it’s sixty days whatever your sixty day fee is um because if the process is the same and the framework’s the same I mean. There’s going to be some standard deviation there. But like if it’s generally the same um then and you’re spending you know close to the same amount of time for these like types of projects. You know like a 30 day project it’s close to the same amount of time I would just I would just like say hey my fee is for this. Particular projects $2500 and then I would just ask for all that money upfront like that’s what I would do.

22:50.00
Molly
Oh.

22:55.41
Molly
Oh.

22:58.44
Preston Lee
Yeah, the other thing that creates friction in the sales process we have found at least is a proposal now sometimes I know that can be different when you’re working with like very official government types and um things like that. But like.

23:12.77
Preston Lee
Ah, proposal a lot of times can get in the way of closing the deal instead of just saying like here’s what I offer here are 3 packages I offer it sounds like this is going to take forty five days that would fall in my 30 to 60 day package and that is $3500 or whatever. Um.

23:20.16
Clay Mosley
Ah.

23:27.38
Clay Mosley
Um, yeah.

23:27.94
Preston Lee
Again, we we continue to make up numbers feel free to fill in with real numbers if you’d like Molly but um, but yeah, it adds so much clarity and you just get to that that sale point the yes or no so much quicker.

23:30.46
Molly
Oh and.

23:41.26
Molly
Yeah, yeah, well and that’s that’s always the thing because like I said everyone’s a little bit different and so I guess my worry would be if I say you know this is my thirty day package

23:43.72
Preston Lee
It helps you plan your time more too.

23:59.28
Molly
Are they considering me their full-time employee for the next thirty days because maybe they’re working on it every day. Um, but I’m not necessarily working on their stuff every day you know what I mean.

24:03.94
Preston Lee
Yeah.

24:06.32
Clay Mosley
Well, that’s yeah, that’s that’s the that’s where you just set those expectations upfront so you don’t you don’t guess I don’t don’t ever guess what? they’re thinking you tell them what is included and you make sure in the proposal.

24:11.74
Molly
The.

24:19.45
Molly
Oh yeah.

24:20.30
Preston Lee
Yeah.

24:26.40
Clay Mosley
That hey here’s the exact work scope and this is how I work you know what I mean and make that very very clear.

24:32.41
Preston Lee
It’s it’s kind of like buying anything right? like you know if if someone’s going to sell a car and they’re like oh I’m worried people are going to think it has a sunroof and it doesn’t Well I’m going to list that right I’m going to list the features it has and doesn’t have.

24:44.59
Clay Mosley
Ah.

24:46.48
Preston Lee
So people know exactly what they’re getting for the price that they’re paying and I think it’s I think it’s just like that when you list your services This is this is basically productizing your service and that would be a good thing for you to search and research and learn about is productizing services but you’re basically saying like instead of a service. Well it is a service but it’s.

24:58.33
Molly
Oh.

24:58.45
Clay Mosley
Um, yeah.

25:04.24
Preston Lee
Ah, service as a product and so that means that I’m going to lay out all the features of this product. The feature might be I will work up to 3 hours a day on your project for thirty days um you know I will be available Monday through Friday I’ll I’ll communicate via email or.

25:17.20
Clay Mosley
Um, yeah.

25:21.60
Preston Lee
Phone like you so you lay out all these things. So the client knows exactly what they’re getting.

25:26.50
Clay Mosley
You know I did I had the same similar concern Molly whenever I decided to do my websites on a monthly fee. Um, because not not not.

25:35.34
Molly
Ah.

25:38.25
Clay Mosley
Not the monthly fee specifically but simultaneously what I decided to do which was bizarre at the time um to to include in website packages was I said you get unlimited content updates and they get done within 1 business day.

25:57.67
Clay Mosley
Included I didn’t charge hourly on top of my my fee and so that was never heard of like nobody ever did that. In fact, all my web design friends told me I was freaking nuts. Um so the gamble was it’s like man what happens if like I get a client who.

25:58.21
Molly
Aha.

26:17.34
Clay Mosley
Says like oh great unlimited changes like I’m and unlimited content change I’m going to I’m going to I’m going to request like a million changes a month and then all of a sudden there goes my profit. Um, this all comes down to 2 things 1 I already said ah expectations but 2 pre-qualifying.

26:20.94
Molly
Ah.

26:26.89
Molly
Aha.

26:36.28
Clay Mosley
You got to prequalify them so asking the right questions during your your discovery call. Whatever you whatever you call it? um and making sure that you know that. Not only do they know the expectations but also are they going to. Do they understand the expectations and ah and are they going to not take advantage of you know a situation or or overstep the boundaries. Um, because if you ask those right questions on the front end and there’s some red flags Boom You don’t take them as a client.

27:04.63
Molly
Yeah.

27:11.19
Molly
Yeah, definitely and I I do feel like I’m pretty a pretty good judge of character or judge of ah you know state of crisis a team is in where you know if if it looks a little too crazy I might say well I don’t know if I can help you with this right now.

27:21.32
Clay Mosley
Um, yeah, and you know what? you know what? you do you? you charge a crazy fee. You know I mean you see you could still take it on.

27:29.68
Molly
Um.

27:31.90
Preston Lee
Yeah, absolutely.

27:32.67
Molly
Yeah I had a yeah I I had a former boss that told me that as well. He was like if you don’t want to do something just tell them. It’s $500 an hour and see what they say so I was like well to.

27:44.74
Clay Mosley
Um, yeah.

27:45.49
Preston Lee
Well yeah, because either you get paid $500 an hour to do a crazy job or you don’t have to deal with them. It’s a win-win for you. There’s not. There’s not a downside. Yeah and I mean jokes aside really, that’s particularly it sounds like you have clients calling in emergency state all the time.

27:52.60
Molly
Right? yeah.

27:53.87
Clay Mosley
Here.

28:02.92
Molly
For.

28:04.37
Preston Lee
Man People are willing to pay money when they feel like they are in a crunch. You know what I’m saying.

28:07.19
Clay Mosley
For sure.

28:09.93
Molly
And yeah, but we don’t want to take advantage of that in like a ah predatory kind of way because I want them to also be you know, ongoing clients and um, you know come back and have a.

28:14.76
Preston Lee
No absolutely.

28:23.39
Molly
Make sure that they feel like the exorbitant amount that they paid was worth it.

28:25.85
Clay Mosley
Yeah, you’re not, you’re not taking advantage you are you are justifying your VIPPriority status that you’re going to charge them to move them to the front of the line. That’s what you’re doing.

28:33.47
Molly
Yeah I like that I like it. Yeah.

28:43.80
Preston Lee
Ah I love how everything we’re saying Molly is sort of like I half believe you guys the other half of me thinks you’re crazy.

28:49.40
Clay Mosley
Um, I know right? Ah, even the way you said no ah.

28:49.41
Molly
Um.

28:54.40
Molly
Um, no I This is really helpful.

28:58.55
Preston Lee
Yeah, ah, that’s all right? That’s all right I mean these are these are particularly where you’re new in in figuring this out and and we don’t know your industry as well as you do too right? So like we always say on the show. We. We have some good ideas. We think. Some ideas that have worked for other people definitely’ve been doing this long enough that we know our ideas tend to work for people. Um, but every industry is different. But I think a lot of these things are worth experimenting um within your business and seeing how they pan out Molly were um, we’re.

29:30.11
Molly
Ah, here.

29:31.53
Preston Lee
I Don’t know I feel like clay and I are maybe talking a lot I Want to make sure we get in everything you want to chat about and that we’re headed in the right direction is this helpful have other questions now are arisen is there is there something we’ve left out that you’d like to tackle now. Um, where should we take the episode from here. Do you think.

29:42.96
Molly
Um, yeah, so I also wanted to ask you all about you know your thoughts on the benefits and drawbacks of having an llc versus just. Um, you know staying as I am which is just a ten ninety nine employee meaning that I don’t actually have a business entity. Um, and I I feel like you know when you are going to have employees and when you know your business grows beyond a certain point. That’s essential. Um. And so at this point it’s not essential for me. But what do you think about? you know, being a ten ninety nine forever should you eventually have a business entity and like what are the benefits of that.

30:23.74
Preston Lee
Yeah, good question clay. Do you want to start you Don want me to.

30:29.33
Clay Mosley
Um, first of all, ah we are not lawyers in Cpa’s there’s a disclaimer I don’t mind um that yeah, there’s there’s these these are drastic differences.

30:31.98
Preston Lee
Oh yeah, thanks.

30:45.42
Clay Mosley
Between 1099 and llc or or Scorp basically corporation. Um I would say like as long as you ah have consistent work coming in. Um I think you are it’s way more beneficial to form a corporation of some sort. Um, probably in llc talked to a cpa or an attorney. But um, the reason is well first of all I can tell you right now you would save a ton in taxes because as a ten ninety nine you’re getting charged. You’re getting charged at the highest tax rate. Um, there’s a way to.

31:06.26
Preston Lee
Yeah.

31:14.12
Molly
Oh.

31:14.75
Preston Lee
Ah.

31:23.97
Clay Mosley
Do this to where you can save money in taxes. Where basically if you’re like an lllc and your taxes is an Scorp you can pay yourself a reasonable salary. Um, where instead of like let’s just say like right now. You’re a ten ninety nine and you get paid 5 k for a job. A lot of people who are ten ninety nine s they’ll just automatically take that 5 k and consider that as personal income and go spend it? Um, but what you do instead as a corporation you you make 5 k but you’re only paying yourself a thousand dollars a month.

32:03.41
Clay Mosley
So even if even if ah, next month you make 10 k your salary is a thousand dollars a month and you can increase your salary according to you know or or distribution. What’s called distribution. Um, according to how much revenue you’re bringing in so the more revenue you bring in. You gave yourself a pay raise. But basically you are your own w two salaried employee of your own company. You actually get a pay stub. Um, so you save taxes that way.

32:27.98
Preston Lee
Yeah, what? what? that does is it helps you not have to pay self-employment tax. So you instead of instead of paying personal income tax and self-employment tax which is what you would pay as a ten ninety Nine worker now instead your business pays taxes at a lower rate than self-employment tax and then you you still pay your personal income tax and it really it really makes the biggest difference once you start getting into like the 60 to 100 k plus a year in revenue.

32:48.30
Clay Mosley
Um, yeah.

33:01.40
Preston Lee
And and this is in the us. So if you’re listening outside of the us. We’re not sure what how it works in other countries but in the us um, you know, definitely that S-corp election and these are all sort of big confusing words and terms definitely worth talking to a Cpa or we are affiliate partners with a company called collective.

33:09.27
Clay Mosley
And.

33:20.41
Preston Lee
I’m a personal customer of theirs meaning my business is a customer of theirs. Um, and yeah, they save me probably 12 to $15000 a year on taxes. Um, maybe more at this point I haven’t looked in a while but they save me a lot on taxes and so that’s. Maybe the biggest benefit I would say to Molly in your particular field. Um, and I should say well let me backtrack for one second we will link to collective and I’ll make sure to send you a link as well. Molly, we do have an affiliate link but like I said I’m a customer i. Highly recommend them. Um. They do all your taxes. They do your personal taxes and your business taxes. They’ll set up your llc and your Scorp Election Belt they’ll set up all the stuff we’ve talked about kind of on autopilot for you and then you just have access to their team. It’s really really nice. Um, okay, so yeah, and then and then.

34:02.88
Molly
Oh okay.

34:08.44
Preston Lee
The other reason you might want to consider it. The lllc is you might know that lsc stands for a limited liability corporation and and I think in your industry this might be particularly important when Clay designs a website or when I write articles for people. It’s it’s kind of low risk right? like. You know my clients aren’t going to lose out on a billion dollar government contract and I don’t know if that’s how your clients are or what the numbers really look like but it sounds like every once in a while there might be some pretty high stakes. What an lllc does is protects you personally from any sort of Lawsuit. So if a client came and said we are we are positive we would have won that if you had not missed this detail that got our proposal thrown out right? They right now as a ten nine to 9 worker they can sue you they can take your personal assets your home your bank account everything that belongs to Molly now if you set up Molly L L C. They can

34:48.78
Molly
I Hope okay.

35:07.82
Preston Lee
They can only sue for assets that your company owns and then your personal assets are safe. So obviously that’s a worst case scenario and probably will never happen but but that is one of the major other major advantages of forming an llc instead of just being a sole proprietor.

35:19.53
Clay Mosley
Yeah, but nobody but nobody ever thinks it’s gonna happen until it happens.

35:22.64
Molly
Yeah, and yeah, well actually it was um, one of my first clients in in our contract said you have to have ah professional liability insurance which I had never heard of.

35:25.26
Preston Lee
Until happens. Yeah.

35:36.35
Preston Lee
Yeah.

35:37.96
Molly
Um, and so I actually had to get um you know a separate insurance policy through my you know car insurance provider to get like a million dollars in professional liability insurance for things like that. Um you know which was kind of a bummer. It was like $400 a year or something. Um.

35:46.40
Clay Mosley
Yeah.

35:54.26
Preston Lee
Yeah.

35:57.17
Molly
But I definitely think yeah like eventually the Llc is probably the way to go. Um, because yeah, there are definitely some some high stakes. Um, and I I think too my other question more broadly would be um, you know like I said. Before like you know I got into freelancing because I I love having that freedom and want to make you know the most money with the least amount of hours worked and right I I don’t know some people they like to work a lot. Um, but but.

36:23.68
Preston Lee
Um, don’t we all. So.

36:34.77
Molly
You know I do see an opportunity you know down the line when people are asking Oh do also do graphic design for a proposal. Do You also do proposal Management. You know there’s like different aspects to creating ah a proposal package where I think oh. Do know somebody like let me tell you know you could you could call this person you could call this person. You know if I had some sort of an agency where someone could come to me and then I could subcontract it out. That’s definitely and and that’s a common thing that um, that other people have done in the proposal interest industry.

37:04.79
Preston Lee
Yeah.

37:09.51
Molly
But um, you know I’m kind of wondering you know is that just more more work than it’s worth at the end of the day like will I just be bogged down with a bunch of administrative tasks and never be able to get away.

37:23.60
Clay Mosley
Depends on how much you’re charging. You know I said it just depends on how much you’re charging.

37:28.27
Molly
Yes.

37:39.56
Clay Mosley
Um.

38:43.97
Molly
Yeah, and and right now you know it’s just money that goes into a bank account that I manage and I have no you know, sort of expenses and my only reporting is to my clients and so. Yeah I guess I was just a little daunted by you know, having the responsibility of of other people in their work and their you know those different kinds of paperwork related things.

39:04.92
Clay Mosley
And. Are you are you good at a project management is that something you enjoy doing.

39:19.34
Molly
Um, yeah, definitely it’s it’s sort of part of proposals. Um, but you know it’s sort of yes, but not if it’s going to make more work.

39:22.82
Clay Mosley
Yeah.

39:29.71
Clay Mosley
Um, yeah I mean.

39:29.94
Molly
Which is why I’m a proposal writer and not a manager because they have you know sort of the most work and the most responsibility and you know it’s a pretty demanding task. Yeah.

39:33.65
Clay Mosley
Yeah, you’re juggling a lot of things. Yeah, that’s that’s I was going to say like I think I think it all really depends on whether or not 1 you you enjoy juggling a lot of things like that and 2 are you good at it if the answer to both of those is yes then on paper.

39:49.20
Molly
Ah, ah.

39:53.57
Clay Mosley
It makes sense to do that because it is more money. It’s an easy sell. It’s an easy cross sell um versus going out and getting a brand new proposal client. Um, and as long as you charge enough money to justify. You know the time to manage those. Projects then to me it makes sense now. 1 thing you have to keep in mind is if you if you go that route that’s time taken away from where you could work on actual proposal stuff. Um, so.

40:28.80
Molly
Maha.

40:29.35
Clay Mosley
Keep that in mind as far as like allocation of time. But if you can actually you know if you if you so if you like made $500 an hour on proposals but you directly doing it. But if you can make seven hundred and fifty dollars an hour managing. Projects from like a cross sale like on paper that makes sense. Um, but also keep in mind too like if you’re gonna do this I would 100% ah formulate some sort of lllc. Ah, because if you subcontract you’re still responsible. Not not.

41:00.26
Molly
Oh yeah, me.

41:08.10
Clay Mosley
Subcontractor.

42:56.82
Molly
Yeah, yeah, and I I definitely am um, looking to eventually mentor some folks because you know proposals is something that I never knew really was an industry until I got into it and I think a lot of other humanities. Majors out there would um, really excel at it. So I Definitely want to preach the benefits of a career in proposals.

43:31.82
Molly
Um I guess Rapid Fire question. Um, what’s your best advice for working while you’re traveling.

43:44.48
Clay Mosley
Yeah, yeah, yeah, also some good headphones.

43:52.12
Molly
Ah.

43:55.66
Clay Mosley
Um, what else there.

43:58.89
Molly
Um, both yeah I’ve only um.

44:04.14
Clay Mosley
Yeah, and on an airplane get first class if you can ah the there you go.

44:09.27
Molly
Maybe someday Maybe when I start that agency you know, but.

44:19.94
Molly
Kind of.

44:32.93
Clay Mosley
Um, and.

44:37.33
Molly
Oh my.

44:43.55
Clay Mosley
Um, this.

44:45.25
Molly
Yeah, um I don’t think so I think that covered about all my questions.

45:01.46
Molly
Yeah, so you can just find me on um, Linkedin and I believe the the link to my profile will be in the show notes. So would love to you know speak to anyone interested in. You know. Either my services or about proposals or anything in general. So.

45:18.43
Clay Mosley
Well cool.

45:28.70
Molly
Thank you.

45:28.81
Clay Mosley
Thank you guys see ya.

 

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Written by Preston Lee

Editor at Millo.co

Preston Lee is the founder of Millo where he and his team have been helping freelancers thrive for over a decade. His advice has been featured by Entrepreneur, Inc, Forbes, Adobe, and many more.

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