Re: Consulting in California

Joe Chisolm wrote:
On Tue, 08 Jul 2008 23:05:40 -0700, BobW wrote:


I'm about to leave the salaried workforce and become a consultant. I
realize that I'll now be paying my own Social Security/Medicare taxes
directly (along with fed/state income tax).

Do I need any type of business license since I will now be self employed?

Any tips will be appreciated.

Bob

== All google group posts are automatically deleted due to spam ==

I've done the sole proprietorship/dba, llc, c-corp and s-corp. Just
starting out I would pick the first, simple, easy to setup. You don't
need a EIN, you can just pay your quarterly estimated taxes.


Yep.


If you are working from home make sure everyone around you knows that
you WORK from home, you are not sitting there watching TV and they
can not just pop in anytime. Same goes for yourself, you still have
to go to work, even though the commute may be from the bedroom to
the den. If you work a lot from home, leave work sometimes. Go out
for lunch.


Not good for your body. Eat at home, home-made bread. But yes, set the lunch hour just like you'd do at a company. I always eat 12:10 unless some urgent biz call came in, just like in the corporate world.


Don't fall into the "business expense" trap. What you get with a
business expense is basically a 30% discount (because you pay with
pre-tax dollars). It's still money out of your pocket.


Amen!


Watch your phone cost. Use a cell phone, with free LD, for your
business phone.


Or use phone cards. $20 at Costco, 700 minutes. Lasts forever. We always have one for biz use that gets expensed and another for personal use that doesn't get expensed. For international pre-dials like 1019898 can be a better deal. All this may sound like extra work but it sure saves a ton of money. On a cell phone you'd probably wreck the battery rather quickly and IMHO the audio quality can be inferior.


Don't mix and mingle funds. Keep the business check book exactly that.
If you pay for stuff with your personal credit card, expense it and
pay yourself out of the business account. Make up some type of
business expense form and use them.


I do pay stuff from personal. It's a matter of good book keeping. Records get filed and promptly entered into a MS-Works database. That program comes included with many PCs.


Keep track of auto expenses. These can really add up.


Or just use the IRS mileage rate. Unless you drive a newer expensive model it's pretty much a wash.


Health insurance can be a *big* surprise. If you and your family are
not covered by your wife's plan check into the cost now. Look at
joining some business group with a group plan. Also, look at your
health care cost with reason. Do you really want to pay a $900 a
month so you can fill that $50 prescription for $5?. I've found
health care is where you really have to do your homework.


VERY important: If there is the slightest blemish on your health records you may become a pariah, IOW uninsurable. The worst that can happen is you apply and they all turn you down. One filled prescription of an anti-depressant or whatever can be enough.


Know your customers. If the deal does not feel right, walk away.
It's hard sometimes, but working 12 weeks on a project, with the
associated expenses and not getting paid hurts worse.


Yeah. Watch out for red flag phrases like "cost is no issue", "c'mom, let's get it done" (without a detailed upfront cost study), "it should be a piece of cake for you", "let's not worry about agency approval right now" or "there'll be tons of money once we sell it".


Money in the bank. Everyone has their own comfort level, but you
need that cushion while you transition between projects. Figure out
your normal living expenses and how many months you want in the bank.


You need a rather extreme lowpass function behavior in your finances. Plus a six month buffer, at the least.

And: Get organized. IMHO everything should be in databases that can be auto-sorted in all fashions, _not_ Excel. Each client gets an invoice code plus a monthly incrementing number that also has the year in it, and client directories for work files must be strictly separated. Meaning don't store all the sim files in one LTSpice directory etc. No multiple piles of paper on the desk, you should be able to clean up in minutes to receive a client visitor and he shall not be able to see any other client's stuff. For example, in my case it's in binders and they are in a locked cabinet. Recent work not yet filed away (that I still need to work on) is in manila folders, also in a lockable cabinet.

Backup: Have everything backed up very regularly and occasionally one copy should go off site in case a natural disaster strikes. For example the safe deposit box at a bank at a reasonable distance. I carry around a USB stick but only I can access the files on there. U3 code can come in really handy with this.

--
Regards, Joerg

http://www.analogconsultants.com/

"gmail" domain blocked because of excessive spam.
Use another domain or send PM.
.

Quantcast