Self employment advice

[gsganzer]

I need some information/feedback on self employment. I'm just starting to research this and it's time to consult the TBN brain trust once again. I'm just looking for some basic info first, I'll start digging deeper as I go.

I'm contemplating starting a business and working for myself as a technical field rep and start-up/commissioning expert. I have extensive experience with process equipment used in the oil/gas and power generation industries and I have a number of business contacts saying they're interested in using me as needed. The big benefit for them is that they're buying the service "by the cup" and avoiding the cost of overhead in between service calls. Right now, I would be employing only myself. This could possibly turn into something bigger at some point (multiple reps working under me), but I'll broach that when/if I get there.

A little background first. This business venture is meant as supplementary income. Our primary income and health insurance is through my wife's employer, so I don't need to go down the health insurance rabbit hole yet.

Some of my basic questions to start:
Did you use an attorney to set up your business? How did you structure your business?
Do you use a CPA or are you using a software program to manage your books? Tax filings?
Liability insurance?
What payment terms with customers, Net 30 etc?

Thanks folks! I'm sure there will be more questions to come.

 

[fishheadbob]

You can go broke with professional advice setting you up as if you're Exxon-Mobil before you earn your first nickel. My suggestion would be to start as a self employed individual and see how things develop. Over the years I've been a LLP , a LLC, , a Delaware corporation, a LP, and gods know what else. Lawyers and CPAs don't work for nothing and they make their share of mistakes, just like the rest of us. None of those guys came cheap either.

Right now I'm back to being a self employed individual, which is by far the easiest; I have enough experience to handle my own tax stuff without help, and my current business of farming is a lot easier to report than some of the stuff I used to be in. If business takes off you may have to take on becoming a more complex entity.

Talk to your regular tax guy after you get a feel for how things go to ask if there is any specific reporting requirements for what you're doing.
Save all your receipts for everything in a big envelope, keep your ledger as simple as possible in the beginning. Like a notebook.
Good luck. Hope you become a conglomerate.

 

[EagleTDL]

You've got some things to think through... First piece of advice I'd give you is spent an hour with a CPA and an hour with an Attorney, it will be worth the $200-300 bucks you spend. You can even write it off if you decide to pull the trigger! The bean-counter can give you the pros/cons of S-Corp, LLC, Self-employed, etc based on your current financial situation. The Attorney can start you down the right path based on the Accountant's advice, each state has different rules about business types and how to incorporate.

Once you've gotten the advice for your state requirements, then you can decide to use those agencies to help you or do it yourself. That's your call, what's your time worth at the end of the day? When I did this in AL back in '07, I got everything going for less than a grand. But, again, that's a personal choice, none of the requirements are so hard that you can't do them yourself...

I use both a CPA and QuickBooks. I do all the Payroll and Quarterly filing for a two-person company. It's pretty time consuming to figure out just exactly what has to be done (see CPA advice above), but once you get it down it only takes a hour or so a week to do the Company paperwork. I let the CPA do the End of Year stuff, that way he can correct anything I've dorked up earlier in the year! And his fees are deductible on the next year's returns.

Liability Insurance is a good idea, but part of the player in that is how you are getting paid?? If you are getting money as a 1099 employee (consultant), your liability values may be different than if you have a contract with the Payer and they have Subcontractor requirements. Might want to feel your contacts out on that subject?

Net 30 really ain't "30" days, just so you know! You need to get that exactly in place before you go forward... I've seen "Net 30" start the clock when the Invoice is received, or when it is "processed". I've seen it be 30 days + processing + 1 week to cut the check. Each company handles that differently, again, feel out your prospective customers on that topic.

That'll get you started, and good luck!! :thumbsup:

 

[Garandman]

Most states have Small Business Development Centers that will advise you. For free or little cost.

Texas SBDC Network

 

[lennyzx11]

I opened an automotive shop after leaving the Army. One man show then hired on a helper then a mechanic then two three four up to five at one time. I was making the same every year clear. The headaches at the height of it was horrible. A divorce caused me to shut it down as "she wanted half" but that was the best thing I did in my career path. I worked a few years on my own as a secondary job. I enjoyed that much more than you'll ever know.

So to your request.

Work it as a second job with options to back out if too much.

Don't hire a permanent helper until you absolutely have to.

Think about trying to hire on one of those companies and using their corporate umbrella with a salary to be close to what you will make without the overhead and heartaches.

This is the best piece of information I can say from experience.
Sir, you start a business and you are going to marry it, be it's momma, poppa, and everything else. When you figure the time versus money equation on the way to the "Good Life", you'll find out you worked your *** off for every penny. No business ever has succeeded with only a token commitment to it. Ever.

 

[kevin37b]

If you have to ask those questions with an education such as you have , get a job .

 

[Tomtint]

I have been self employed for 30 years. Before you go balls deep with legal etc. Start off with plenty of insurance and a talk with your CPA. Your CPA will advise you how to structure your new company. Either a DBA, INC, Partnership, sole proprietor etc. there are pros and cons to all. Our terms with regular clients are net 30 that inevitably turn into net 60-90. You need to make sure you have the reserves to wait for payment sometimes.

 

[gsganzer]

If you have to ask those questions with an education such as you have , get a job .

Kevin, are you just an internet prick or are you also a prick in real life? I'm guessing the latter.

I don't see where my questions to get some basic input from some others that have gone down this path, should illicit a crappy post like that.

 

[PILOON]

Going into business is a gamble in itself.
My thought is if you go for all professional advice and consultants etc you start yourself off with a costly overhead.
I'd be tempted to gamble a bit and start off small and add pro's as needed.
If you are member of a professional organization (engineering?) your assn probably has some sort of liability program, start small and add as needed or when the DIY gets too much to handle.
It is all kinda simple, pay taxes on your earnings and nobody will bother you.
As you go on you learn what you can write off, depreciate etc etc.
\Being in Canada I am not familiar with US and state taxes and loopholes etc but for sure as long as you file returns honestly nobody shoud bother you.
Later on you can look at professional advice.
\Go for it!

 

[JFoy]

I've been employed, unemployed, self-employed, and employer. I've run service businesses and brick n mortar retail. I've had DBAs, C corps, and S corps. Being your own boss is great for the ego but it also means you have to be absolutely firm with the finances. It means riding the roller coaster in terms of income - some months you're up by thousands and others, you're credit card balance scares you. Until you get your bank account padded with above and beyond tie-over monies for the slow times, you can forget the 'I want that so I'm going to buy that' mentality. Financial stress will cause so much stress in your marriage, it ain't funny. I agree with some of the others to check with your accountant and attorney in the beginning for advice on whether it is even a good idea and if so, how to go about it. Then check with your insurance agent about liability insurance - people love to sue these days. If all checks out, try it as a side job.

Every guy wants to own his own business. It's an independence thing. Biggest lesson I learned was I always grossly overestimated my own knowledge of what it takes to make a business last. In other words, I didn't know what I didn't know. Still, once you get one going, it does feel nice.

Hope that helps.