A Pragmatic Look into Independent Contracting
Presented by: Jessy Houle
Objectives
• Answer a few popular questions• Starting your independent consulting business• Running your independent consulting business• Closing thoughts
Before We Begin…
Disclosure Statement
Common Questions
• How risky/safe is independent contracting?
• Generally, how long are contracts?
• What is the difference between an Employee, Contractor, and Independent Contractor?
• What about benefits?
• What taxes is my company responsible for?
• What type(s) of insurance is required for my company?
Freedom/ControlWho dictates your vacation, days off, insurance carrier, 401K provider, and amount of time off?
ProtectionWhat happens when you are liable for damages?
Write-offsWhat types of write-offs are available?
Why would you want to become an “Indie”?
Freedom & ControlComparison of business owner and employee/contractor
Brette the Business Owner
Bill the Employee/Contractor
Time off (vacation)Your choice of amount of time, but
unpaid
Between 1 to 5 weeks off;Timing partially dictated by
employer
Choice of Insurance(Life/Medical/Dental)
Your choice of life, medical, dental and HSA, Flex Plan, etc.
Partially dictated by your employer
Choice of 401K/retirementYour choice of provider and many
more options to choose fromDictated by your employer
Type of work Your choice of contract Dictated by your employer
ProtectionComparison of business owner and employee/contractor.
Brette the Business Owner
Bill the Employee/Contractor
Some one sues youCompany assets are used to pay creditors, but personal assets are
protected
Personal assets (eg: home) can be used to pay creditors
Further Protection Liability Insurance A good lawyer??
Write-offsComparison of business owner and employee/contractor.
Brette the Business Owner
Bill the Employee/Contractor
Computers Deductible Not deductible
Cell Phones/Plan Deductible Not deductible
Software Deductible Not deductible
Hardware Deductible Not deductible
Books Deductible Not deductible
Home Office Deductible Not deductible
Internet Deductible Not deductible
Dividend PaymentVerses Payroll/Income
No/Smaller Social Taxes Applied Not Available
Objectives
• Answer a few popular questions• Starting your independent consulting business• Running your independent consulting business• Closing thoughts
Business (Entity) Types
SoleProprietorship
GeneralPartnership
LLC S-CORP C-CORP
LP/LLP
Decision Making Checklist
Protection of family assets and investments
Management of control
Avoid family disputes
Flexibility of decision making
Succession of family members to management
The nature of business to be operated
The nature of the asset to be held
Number of owners involved
Estate planning and gifting of assets
Who may legally obligate the business
Effect of owners death or departure
Need for startup funding or capital
Taxation
Privacy of ownership
Consolidation of assets and investments
Business (Entity) Types
SoleProprietorship
GeneralPartnership
LLC S-CORP C-CORP
LP/LLP
Protection of family assets and investments
Flexibility of decision making
Need for startup funding or capital
Business (Entity) Types
SoleProprietorship
GeneralPartnership
LLC S-CORP C-CORP
LP/LLP
Protection of family assets and investments
Flexibility of decision making
Need for startup funding or capital
Business (Entity) Types
SoleProprietorship
GeneralPartnership
LLC S-CORP C-CORP
LP/LLP
Protection of family assets and investments
Flexibility of decision making
Need for startup funding or capital
Business (Entity) Types
SoleProprietorship
GeneralPartnership
LLC S-CORP C-CORP
LP/LLP
Protection of family assets and investments
Flexibility of decision making
Need for startup funding or capital
Creating a Corporation
Articles of Incorporation SS-4 ABR 2553 MN UI or DEED-
591
Creating a Corporation
Articles of Incorporation SS-4 ABR 2553 MN UI or DEED-
591
Creating a Corporation
Articles of Incorporation SS-4 ABR 2553 MN UI or DEED-
591
Creating a Corporation
Articles of Incorporation SS-4 ABR 2553 MN UI or DEED-
591
Creating a Corporation
Articles of Incorporation SS-4 ABR 2553 MN UI or
DEED-591
After Company is Setup• Open a bank account for your new company
• Open credit accounts (EG: credit cards) with your new company
• Purchase business software/services (time tracking, book keeping, and invoicing)
• Publication of a legal announcement
• Set up benefits (medical, dental, HSA)
• Find a good…• Insurance Agent (Liability Insurance)• Business lawyer (Legal Questions or Issues)• Accountant (Year End Taxes and optionally Quarterly Taxes)
Objectives
• Answer a few popular questions• Starting your independent consulting business• Running your independent consulting business• Closing thoughts
Running your company
Business
• Keep corporate meeting minutes to record decisions made and actions taken during shareholder and directors meetings
• Annual State Renewal of Corporation ($35)
• Annual Liability Insurance for Corporation (~$300)
• Continually marketing your business (AKA yourself)
Running your company
Accounting
• Tracking• Keeping receipts for business expenses• Time tracking of work• Mileage tracking
• Recording• Creating Invoices• Payroll and Dividend Payments
• Matching• Receipts to bank transactions• Payroll and dividend payments to bank transactions• Invoices to payments (aka Accounts Receivable)
• Reporting• Quarterly and annual tax
Demonstration
Walk through tools and procedures I do
Your tools and procedures may/can be different
Objectives
• Answer a few popular questions• Starting your independent consulting business• Running your independent consulting business• Closing thoughts
Closing Thoughts
• Use every opportunity to connect with others when looking for your next contract
• Stay engaged with your accounting (bookkeeping, preparing your taxes, etc.)
• Be professional
• Keep your business separate from your personal
• Independent Contracting isn’t for everyone
Thanks for Coming
• Answer a few popular questions• Starting your independent consulting business• Running your independent consulting business• Closing thoughts
Resources
http://storage.indie.mn/documents/Mileage_v1.xlsx
http://storage.indie.mn/documents/WeeklyTimeSheet_v1.xlsx
https://www.youtube.com/channel/UCIPHPfB4DX252pnjuIQIH7Q