Starting new job... thoughts on freelance and 1099

g.mccormick

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Join Date
Jul 2012
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IN
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At the end of June I will be leaving my current employer, taking a few weeks, and then starting a new position with a new employer end of July. I have been kicking around the idea of starting to do some side/freelance work after moving to my new company (not a conflict of interest as new company does not do any for-hire type controls work). I have verbally offered my current company (that I am leaving) that I will potentially be available to help out as I can (this would probably just be on a 1099 to start atleast).


So I guess I am asking the collective here:
1. Any thoughts on doing freelance/side work (obviously it cannot conflict with new employer).
2. I am thinking that LLC is probably a good decision. Is there anyone with current LLC (especially if it is a side gig) that would be willing to talk with me?
3. more i know.
 
I left my previous employer last Feb. and considered trying the "contractor" role. Lots of liability insurance needed by most plants. You may need other things too.

I decided to go through a local job shop. The mark up was about 50%, but they covered everything, taxes, insurance, Social Security etc... I did everything on an hourly basis.
So if you want to gross $40, you charge $60, with $20 going to the job shop.

If you go the job shop route, you need to shop around, the charges are pretty high on some. Make sure you let them know that you want zero benefits, and will find your own work.
 
1. Have you discussed this with your new employer?
2. will you be using any of the new employers laptops, software?
if yes, you really need to rethink side work. lots of issues here.
3. will you be working on your side projects while on his time clock?
if yes, you better rethink this out.
4. will your side customers be calling you at your new job on their phones?
5. what will you do when your side customer is down and you are working on
your new employers project late at night?

things to consider,
james
 
I left my previous employer last Feb. and considered trying the "contractor" role. Lots of liability insurance needed by most plants. You may need other things too.

I decided to go through a local job shop. The mark up was about 50%, but they covered everything, taxes, insurance, Social Security etc... I did everything on an hourly basis.
So if you want to gross $40, you charge $60, with $20 going to the job shop.

If you go the job shop route, you need to shop around, the charges are pretty high on some. Make sure you let them know that you want zero benefits, and will find your own work.


I hadn't really thought about finding another person/company to work under. That is something to consider.
 
1. Have you discussed this with your new employer?
2. will you be using any of the new employers laptops, software?
if yes, you really need to rethink side work. lots of issues here.
3. will you be working on your side projects while on his time clock?
if yes, you better rethink this out.
4. will your side customers be calling you at your new job on their phones?
5. what will you do when your side customer is down and you are working on
your new employers project late at night?

things to consider,
james

1. I haven't started new company yet, but the new company and freelance work are not really related (not like undercutting)
2. No. I would supply my own or use the customers (fairly niche work for most part).
3. Nope. Except day-dreaming....
4.Side customers would only have my personal phone number.
5. Luckily new company I will not be likely to have to be working late, so that would leave evening open to pickup work (or weekends).

I don't actually foresee much work to begin with. My main objectivies for a side work/LLC would be:
1. Being able to support customers that I am leaving behind (if I can/feel like it).
2. Being able to support my current employer that I am leaving behind (mainly to help out people not the company. Again if I can/feel like it).
3. Slowly see if I can grow a company that would be a worthwhile company in several y ears down the road.
4. Business expense write off for stuff....:)
 
The biggest thing is insurance. To properly insure my small operation cost about $7500/year, not counting truck or worker's comp. That cost is the same if you are doing it part time or full time. Commercial liability alone is much cheaper, but the professional liability really jacks it up.
 
The biggest thing is insurance. To properly insure my small operation cost about $7500/year, not counting truck or worker's comp. That cost is the same if you are doing it part time or full time. Commercial liability alone is much cheaper, but the professional liability really jacks it up.

Whats the main difference between commercial and professional insurance
 
There are three types of insurance you will have to consider.
First is Worker's Comp. That covers you if you're injured on the job. At your 'regular" job you're covered under your employer's policy. On the side jobs you need to cover yourself because the clients won't want to cover you.
The commercial policy protects the client if you don't deliver per your contract. It might also cover loss/damage to your tools..
The third is professional liability, the most expensive of the three. It covers you if equipment you worked on injures somebody. The client won't care whether or not you carry this type because his employees are covered by his worker's comp policy. When an injured party accepts a worker's comp settlement he gives up the right to sue his employer but he can still sue anyone else who might have been involved, including you.
My annual insurance cost when I was still running my business was similar to Highland Controls.
 
Regarding the LLC, talk to a CPA, they can tell you what to do and how to do it. My guy set everything up, filed pretty much everything.


I have an S-corp under an LLC, and am employed by myself. I only pay social security taxes on the amount that I pay myself in salary, thus saving me a lot of money. Back draw is that I would only receive benefits over the amount I pay myself, but I don't really believe in SS. I rather invest the money I save in my own mutual funds.
 
If you do form your own company, be careful what you call it. I have a friend that had his own programming company for awhile. He named it XXX Engineering. In South Carolina if you have Engineering in your Company Name, then you have to pay for and maintain a State Engineering Company license, on top of everything else. Most places around here use Services or Solutions in the name instead.
 
If you do form your own company, be careful what you call it. I have a friend that had his own programming company for awhile. He named it XXX Engineering. In South Carolina if you have Engineering in your Company Name, then you have to pay for and maintain a State Engineering Company license, on top of everything else. Most places around here use Services or Solutions in the name instead.

+1 In addition, and this varies by location IIRC, to call your firm Engineering anything, you must have a PE license.
 
I did exactly what you are planing to do for a few years before I finally cut the cord and when on my own, the biggest problem is if you are doing any factory controls on the side, especially production critical systems, you will eventually be called to go help on a breakdown or other fires, this can be very time consuming and will have an effect on when you are able to show up for work in your new job :sleep:

I tried a few times where I had to call my work and tell them I would not be able to come in before Tuesday and times where i needed to go online with some of my own costumers, when working, you need a very flexible job to be able to pull this to often :)
 
I do this very thing with my previous employer. A small company that did not want to hire another Controls/Electrician. I'm about 4 minutes from both my current and previous employers. We've signed a contract where I will be there IF I can when needed. M-F I charge $65/hr and Sat-Sun $120/hr.
Contract stipulates they supply programming laptop and software needed as well as all tools. All programming that I may develop belongs to them. I bill quarterly and so far has worked out great.
 
I recommend an LLC to do side work, its easy. A single owner LLC is just a pass through entity tax wise. Big benefit if you're partially or fully self-employed, for me, is that you're allowed a solo-401K; max contribution is $55K or $61K per year if you're older than 50. And it allows you to short term borrow from yourself up to $50K for funding projects. Find a self-employed accountant who does tax preparation, he can steer you through all of the benefits because he's using them too.

Best thing I did was go self-employed. Bad thing is I don't get time to golf.
 

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