Technical Self-Employment Is A Fat Paycheck Waiting to Be Pocketed

World New York ^ | Grant Barrett

[Justin714]

Very good article...thanks a bunch for posting. I've been wanting to do something like this (as a side job) but don't know where to start. This article makes everything I've always wanted to know crystal clear.

[ThePythonicCow]

Most useful post. Bump.

I don't need it yet - still getting paid by a big (well getting smaller) computer company. But one must be prepared, in one's mind, for such possibilities.

[tophat9000]

bump

[lewislynn]

I didn't even think of writing them off...Thanks!

After you see your self employment tax (social security and medicare) (15.3%) on top of your income tax you may reconsider.

[quietolong]

bump for later

[mafree]

Thanks for this long but informative article. I've always felt I should offer computer tech services in addition to what I already do as an independent contractor/consultant/ educator but hadn't moved on it. Maybe now I will. I think almost any FReeper can.

[Elliott Jackalope]

Interesting article. All I can say is that from my point of view, being self-employed is where it's at. Once you've been your own boss it is really hard to go back to having some pointy-haired moron telling you what to do with your time.

[Riley]

Another out-of-work IT guy chiming in here. I am in the San Francisco Bay Area, which has a particular glut of IT people grabbing at any job that comes up.

It costs a fortune to live here, so I just accepted an offer on the house and I am getting ready to move in the next two and a half weeks, to the East Coast.

This is *exactly* the article that I needed to see, at *exactly* the right time. Thanks for posting it.

Can anyone offer any insight on dealing with the who-is-your-employer questions when you are freelancing and looking for an apartment?

[Cool Guy]

BUMP!

[Mad Dawgg]

"Big companies only provide a minor fraction of US employment."

"Small businesses employ the most people, and they aren't moving to India.

You are gonna piss Willie and his Protectionist Posse off posting stuff like this!

< SARCASM > Don't you know the sky is falling and Gerorge Bush is to blame?

Come on now get with the program!

Everybody sing now:

Look for the union label
the union label... < /SARCASM >

[The Duke]

I own a small internet development shop and make use of both US and Argentenian programmers. Later this year I hope to go down for a combination fishing / office space shopping trip.

Development costs in S. America are comparable to India, but without the time differential (and I really don't want to go fishing in India!)

[Gideon7]

Can anyone offer any insight on dealing with the who-is-your-employer questions when you are freelancing and looking for an apartment?

File with your state business office for a Certificate of Assumed name for a Sole Proprietorship. In most states this costs less than $100.

Then say "I work for Acme Technology". It's not really a lie; it just happens that Acme Technology is just you.

Now you have something to put on your business card. In the future Acme Technology may grow and you'll hire some staff (and get incorporated) things will really take off. Be optimistic!

[Southack]

This kid gets it.

[Riley]

Good idea. Thanks!

[Capriole]

Well, that's just swell. So glad to hear that you're hiring foreigners when millions of Americans are out of work. God forbid you should keep American dollars in America, helping American workers support their American families.

[LibertyAndJusticeForAll]

Someone on your ping list might be helped by this post.

[Gideon7]

They begin to envision in their minds a larger operation, in which they hire staff to do the work, paying the staff perhaps half of what they're charging the clients, and thus being able to take on the additional clients they might otherwise have to pass on. Of course, they hope to make a killing in the process.

For me, the evidence that this is a bad move is clear. In order to take on that additional staff, and pay for incorporating, lawyers, accountants, office space, and other administrative costs, ...

Yes. Welcome to the world of employment as seen from the employer's side. The extra costs associated with hiring a staff include,

• 15.5% for Social Security (half paid by you as employer, half shows up on the pay stub)
• Medicare, another 2.9%
• Unemployment insurance - required by state law, varies around 0.5-4% depending on the state/region/industy.
• Workman's compensation - required by law in most states, varies a lot depending on state/region/industry, anywhere from 1-8%
• Retirement bennies. Since you have one (you are self employed and trying to minimize your own taxes) federal law essentially requires you give equal benefits to all your employees (I am over simplifying but unless you have expert accountants this is unavoidable) - assume 10%.
• Health insurance (getting outrageous) - nowadays typically 10-15% (assuming you can offer it at all with your small pool risk).

So you are looking at 30-50% overhead before you pay your first dollar of wages. Add the cost of renting an office, getting liability insurance (insane not to with harassment and discrimination lawsuits), futzing with state and IRS payroll forms, complying with OSHA regulations, taking time to train and manage said employees, the rule of thumb is 80-100% overhead for your first employee.

And that is why Acme Corp charges you $50/hr to do something but only pays their employee $25/hr to do it. You can do the equivalent work self-employed while charging a lot less and beat Acme Corp every time.

[TheMole]

Very interesting post. I note that the guy is in NYC, which does have a few more potential clients than some less populated areas.

[anymouse]

I came up with this same conclusion and formed this business when I was laid off from a long career in the corporate tech field:

Handy-Tech^tm at handy-tech.net

[anymouse]

Set up a DBA (Doing Business As) company and make up some business cards. Tell the apartment lease people that you are self-employed and hand them your business card. Assuming that your credit history and bank accounts are in order, and you have some good references, you shouldn't have a problem.

If you were a protected class type person, then you could threaten to call HUD if they give you grief about being "unemployed." For the rest of us, we have to show that we have sufficient income/wealth to rent an appartment.