I have been consulting for the last few years, not by design, that's just kind of the way it's worked out. Consulting can be nerve-wracking but it can be very rewarding too, it's all the mindset you go into it with. Consulting can earn you a lot of money, the downside is that you get no benefits, no vacation, no paid holidays, etc...which is why you get paid more. Some places do offer benefits if you are employed by the recruiting company that places you, but, that can suck because if you flip from firm to firm where the work is your benefits are always moving and changing. If you are the provider for a family it can be a pain in the butt.
What I did when I first started was consult as an independent. To do this I simply incorporated myself, which is easy and cheap, got my own health insurance policy and have the recruiting company pay my "corporation" a flat hourly fee without taking any taxes out. I then take care of taxes myself, the corporation pays me and I deal with all that myself. It's actually pretty easy after a few months when you can get a good system down.
All this helps you avoid the hassles of signing up for new insurance with every contract, filling out new tax forms and all that stuff, you just show up and work, fill out your time card and bill the consulting company. When tax time comes, if you have a decent system down, you hand your tax preparer your profit/loss sheet that is generated by any "Quicken" or "Money" type program, the W2 you give yourself and they can fill out your taxes.
It's best to have a tax preparer when dealing with corporate taxes simply because there is more at risk and lots more laws to follow. They cost a bit, but if you get audited, it'll all be worth it at that point. There are also tax advantages to being a corporation, business expenses that can be written off and other such things that a professional tax preparer keeps up on.
I don't personally like consulting, but that is the way the dice have rolled lately, so, one does what one has to in order to provide for the family.
Thursday, December 27, 2007
How To Consult Successfully
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2 comments:
What type of corporation do you use? I assumed individuals should register as an LLC, but that isn't technically a corporation as I thought I understood it.
I am an S-Corp. LLC is another option...my tax guy encouraged me to do a corp for some tax reason and simplicity reason which I fail to remember why...but they were valid reasons. I know guys that do LLC and that do sole-proprietor (don't recommend that) and it all works.
Check with your tax man, accountant or whoever for details.
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