[consulting] Setting Up as an Independent Contractor

[Eric Tucker]

I'm not a lawyer. Depending on your location, things may vary a great deal. In Texas here are the basic steps for what I personally would do for a single individual up to a company of 3 or 4 developers at least as a consulting business: 

(1) Form either a LLC (limited liability company) S-Corp (Subchapter S corporation) 
(2) Contact an attorney to draft the appropriate documents (single owner with filing fees not over ~$1500?) and have them advise you on specifics of how to file what and where (they can do this for your or you can save some money by doing it yourself) 
(3) Contact the IRS to get a tax ID number (separate from your social security number) 
(4) Elect pass-through taxation with the IRS 
(5) Get some sort of tax accountant (~$500 per IRS return filing, maybe a bit more for some other help) 
(6) Get a sales tax certificate (in Texas you get this from the State Comptroller's Offfice) 
(7) Get a separate bank account for the business (you'll need to show your LLC or Incorporation papers to the bank) 
(8) Get a separate phone number for the business (hey, VoIP's cheap these days -- mine just forwards to my phone) 
(9) Sign up for QuickBooks Online (yes, it's wonderful accounting system, learn to use it and USE IT) 
(10) Get a domain, get some business cards, make a little brochure looking web site 
(11) Think about whether you want a trademark (it's expensive, you probably don't ... get it later if you're successful and ready for more major branding) 
(12) Consider whether you may wish to contract with a bookkeeper 
(13) Save receipts for business expenses including taking clients out to eat or travel and professional education / conferences, computers, etc. 
(14) Check into whether you need to charge sales tax 
(15) Keep a clear delineation between what assets belong the business and what's personal - track them in QuickBooks 
(16) Come up with a basic set of contracts / legal agreements and/or a standard contract for your clients to sign 
(17) All spending for the business is out of the company account 
(18) Only put money into the business account somewhat occasionally 
(19) Survey as best you can what fair market rates are for your services and set them based on that 
(20) Set up a place for basic project management, version control and staging of client sites (maybe rent a colo'd server or two) 
(21) Keep important business documents in a safety deposit box 
(22) Set up a paper filing system for basic stuff 

Keep a clear separation b/w business and personal. Lawyers and tax accountants can tell you why it's important. :-) 

Eric 

----- Original Message ----- 
From: "George Lee" <georgeleejr617 at gmail.com> 
To: consulting at drupal.org 
Sent: Sunday, March 28, 2010 9:22:02 AM GMT -06:00 US/Canada Central 
Subject: [consulting] Setting Up as an Independent Contractor 

Hello, 

Also do folks have information on what steps to take to be an independent contractor? Want to make sure I'm follow the right procedures. 

Peace, community, justice, 
- George 

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