I did some researching lately on the requirements of self-employed status in San Diego, California (laws may be different elsewhere, of course!), and I found out a few things that I thought you might like to know. Some of these facts you probably already knew, and some may surprise you. First of all, did you know that every self-employed person doing business in the city of San Diego is required by law to own a Business Tax Certificate (BTC)? Yes, they haven’t done a very good job at getting the word out about this one, and I’ve never heard of anyone enforcing it, but apparently, anyone could walk up to you while you’re doing your freelance work and demand to see your BTC. The good news is that this BTC (formerly known as a Business License—ah, we’ve at least heard that term before, eh?) typically costs only $46 a year. You may find out all about the BTC, and download the necessary application forms in Adobe Portable Document Format (PDF), at http://www.sandiego.gov/treasurer/
Second, some of us have had, at one time or another over the past several years, certain agencies or individuals tell us that, in order for us to claim independent contractor status, we were required by law to have to have a fictitious business name, incorporated status, a FEIN (Federal Employer ID Number), Worker’s Compensation Insurance, California State Disability Insurance, malpractice (professional liability) insurance, etc. Here is what I found out, by making several phone calls to local and state agencies and by looking up information on government web sites, one of which was (ref #1) http://www.sandiego.gov/economic-development/business/starting/tenkeysteps.shtml:
- A self-employed person is not required to have a fictitious business name. You may do business under your own name, if you wish (see ref #1).
- A self-employed person is not required to be a corporation. You only need to be a corporation if you want to hire employees (see ref #1).
- A self-employed person is not required to have a FEIN. You only need to have a FEIN if you want to hire employees (see ref #1).
- A self-employed person is not required to have Worker’s Compensation Insurance. You only need to have Worker’s Comp if you want to hire employees. Call the California State Industrial Relations Department, Worker’s Compensation Division (28 Civic Center Plaza, Suite 451, Santa Ana, CA, 92701-4070) at 714-558-4597 for more information.
- A self-employed person is not required to have California State Disability Insurance. Employers need to deduct this insurance from their “employees’” paychecks, but this does not apply to entities contracting with self-employed persons. Call the California State Employment Development Department Disability Insurance Claims office (8977 Activity Road, Suite 200, San Diego, CA, 92126-4427) at 800-480-3287 for more information.
- A self-employed person is not required to carry malpractice (professional liability) insurance. However, it is a very good idea to do so, and you may apply for RID’s group professional liability insurance for $136 a year. I wish I could tell you where to go to get an application form. I got one from Janet Maxwell several months ago. I searched RID’s Web site to no avail. However, you may contact RID at:
Registry of Interpreters for the Deaf, Inc.
333 Commerce Street
Alexandria, VA 22314
(703) 838-0030 V, (703) 838-0459 TTY
(703) 838-0454 Fax
- If you do any work as a self-employed person, i.e., if you work any more than 6 days in a calendar year as an independent contractor, even if you usually work for an employer (see ref #1), then you are legally required to purchase a Business Tax Certificate (BTC), and have it on your person at all times when engaged in business.
- You may wish to consider purchasing professional liability insurance as an added protection, even though you are not legally required to carry it.
- A self-employed person is not required, by default, to have a fictitious business name, incorporated status, a FEIN, Worker’s Compensation Insurance, or California State Disability Insurance.
As a freelance interpreter/transliterator, I wanted to be fully aware of the employment and taxation laws pertaining to me, so I did my homework to find out exactly what was what. I may as well not have gone to all this trouble just for myself, so I am providing this information for the benefit of my professional colleagues. If I am incorrect in any of the information I have shared with you here, or if you have additional information that would provide clarification, please reply to me with your corrections and/or additions, and please… cite your sources. ;-)
Best of business to you.
Daniel Greene, CI and CTDaniel Greene first published this document at http://danielgreene.com/lawresep.html in May 2001.