A Pragmatic Look into Independent Contracting

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.



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.



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


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

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


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


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


[email protected]

Resources

http://storage.indie.mn/documents/Mileage_v1.xlsx

http://storage.indie.mn/documents/WeeklyTimeSheet_v1.xlsx

https://www.youtube.com/channel/UCIPHPfB4DX252pnjuIQIH7Q

[email protected]

A Pragmatic Look into Independent Contracting

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