Independent Contractors: Any Advice?

[Shoemaker]

Hey-o Mayberry, for the last 10 years I've been a software developer full-time at a few different companies. I just recently broke from full-time permanent work and took a long-term contract job. I've done contract work in the past, but just to supplement income and make sure my family had the things we needed. Now that I'm looking at doing it for an extended period of time, I want to make sure my ducks are in a row.

I'm using FreeAgent (https://www.freeagent.com) to track my time, expenses, send invoices, etc. I have a separate checking account set up just for managing that money (i.e. paying myself my "salary" out of the account while leaving enough to account for taxes at years-end). And once I see that the work itself is stable, I plan on filing for an LLC so I can shield myself personally from any liability (not doing it right away because it's expensive in CA and money is tight until payments for the first few invoices come through). Healthcare is easier to get these days so I'm not too worried about that either.

Are you an independent contractor? If so, do you have any sage advice you could pass my way? Should I bite the bullet and incorporate myself right away? Any tips are definitely appreciated.

 

[Shoemaker]

I thought I'd bump this once just to make sure it didn't get buried too fast.

 

[Phlog]

Hire an accountant for ones taxes, they are worth it unless taxes are really interesting to you.

 

[Revolver]

Keep good accounting records. Sch C's tend to get audited a lot.

 

[HomerThompson]

I thought I'd bump this once just to make sure it didn't get buried too fast.

Do you have a ballpark for how much you should make for the year? You need to have an idea so you keep enough money back in taxes. Also, do you have an alternative vehicle for savings set up? No 401k as a contractor, but there are other products you can use for tax deferred saving if you wish. You should look at your state's liability laws, as it may be well worth it to incorporate now. You don't want it to get away from you.

 

[bubbleboyjones]

Hey-o Mayberry, for the last 10 years I've been a software developer full-time at a few different companies. I just recently broke from full-time permanent work and took a long-term contract job. I've done contract work in the past, but just to supplement income and make sure my family had the things we needed. Now that I'm looking at doing it for an extended period of time, I want to make sure my ducks are in a row.

Not to break the thread topic but why did you jump over to contracting? Is the pay that much greater than the full-time gig? I know personally my biggest issue going into contracting would be different commutes. I just hate the idea of spending much time in the car driving to work.