Has anyone dealt with something like this? I'm not sure what my options are.
forming LLC for freelance business. I've been dealing with this for about 9 weeks now and the situation isn't improving.
I have already tried to resolve this directly but the other party is not cooperating.
Should I hire a lawyer for this or try to handle it myself?
I practice in this area. Here's my take on the legal issues.
The legal framework here involves both federal and state law. At the federal level, the relevant statute. Your state may provide additional protections.
Before taking legal action, consider sending a formal demand letter. In many cases, this alone resolves the issue.
Just want to point out — the statute of limitations might be a factor here. In some states it's as short as 1-2 years. Don't sit on this too long.
I had a similar issue and ended up consulting with an attorney. It was worth the $200-300 for the initial consultation just to understand my rights.
I work in this industry and unfortunately this is very common. The good news is that when people actually push back with legal representation, companies usually settle.
I'm a freelance web developer making ~$120K/year and I want to form an SMLLC for liability protection and tax benefits. Do I need to form in Delaware like everyone says, or should I just form in my home state (Colorado)?
Form in Colorado. The Delaware advantage is for companies planning to raise VC funding or go public — the Chancery Court and sophisticated corporate law are relevant for complex corporate governance disputes. For a single-member LLC doing freelance work, Delaware offers zero advantages and adds cost: you'd need to register as a foreign LLC in Colorado anyway (where you're actually doing business), pay Delaware's annual franchise tax, and maintain a registered agent in Delaware. Total extra cost: ~$400-600/year with no benefit. Form in your home state, get an EIN, draft a simple operating agreement, open a business bank account, and consider S-Corp election if your net income exceeds ~$70K (saves self-employment tax). Total setup cost in Colorado: filing fee (~$50) + operating agreement (~$500 with an attorney or use a template).
+1 on the S-Corp election tip. At $120K freelance income, an S-Corp election could save you $8-12K/year in self-employment tax by splitting your income into a reasonable salary (say $70K, subject to FICA) and distributions (the remaining ~$50K, not subject to FICA). The S-Corp adds payroll complexity but the tax savings are substantial. Run the numbers with a CPA before your first year closes — the S-Corp election (Form 2553) has deadlines.