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Contracting question - Left old company, but still provide support.


Contracting question - Left old company, but still provide support.

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Sinh Dinh
Sinh Dinh
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I never did contracting before, but I'll be on a 1099 with my previous employer. How would I invoice them my work and how does that affect my taxes? Do I need to had a tax id? I'm not sure where to start.

Any advice would be great.

Thanks
DJS-202175
DJS-202175
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I'm doing the same thing. My ex employer will 1099 me, and I will be expected to pay my taxes based on my total years salary. I invoice them using a simple template provided by Microsoft.

HTH,
DJS
Michael Valentine Jones
Michael Valentine Jones
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You should really contact an accountant about this.

If you don't set it up right, tax penalties can be quite severe.
Jeff Moden
Jeff Moden
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Michael is quite correct... if the 1099's end up becoming your main income or they exceed certain amounts, you MUST pay estimated quarterly taxes... do consult a good accountant! If you don't, you may have to employ a good lawyer Wink

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Steve Jones
Steve Jones
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Get a CPA, and you can deduct their fees on taxes.

make sure you keep track of all expenses in writing. And plan on filing quarterly taxes. Guess what you would owe for the year and fill out the quarterly form, send it in. That's what I do, has worked well and the CPA has blessed it.

Plus you're not looking for a large amount of $$ in april to pay what you owe. Pay as you go along.

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Matt Miller (4)
Matt Miller (4)
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Here here on getting the accountant to help you set up the taxes.

that being said - if you're going on a 1099 basis, using your previous salary as a benchmark - you're shorting yourself some money. There should be a definite "bump" between what you were getting paid to be there 40 hours, and what you are now for giving up your spare time, etc.... Taxes, soft time, time off, benefits, insurance, licensing of your software - that stuff isn't free, so you better be getting compensated for having to maintain all of those things.

You're a contractor now - it will be healthy for both you and your client to starting thinking in those terms, so don't short-sheet yourself. Really - things ARE different now, so the switch needs to be obvious to all.

I'm doing that now - and I charge the client something in the range of 140% of what it used to be under salary.

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Your lack of planning does not constitute an emergency on my part...unless you're my manager...or a director and above...or a really loud-spoken end-user..All right - what was my emergency again?
Brandie Tarvin
Brandie Tarvin
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You also need to discuss with your contractee how often you plan to invoice them and how long they have to pay you. This is VERY IMPORTANT. If you don't discuss it with them, you might get into a dispute with them about what is owed and when.

Also, it might not hurt to consult a lawyer anyway about possibly incorporating yourself. Find out whether it's better to 1099 for yourself or for a company that is you. There are tax benefits & downsides to both.

Brandie Tarvin, MCITP Database AdministratorLiveJournal Blog: http://brandietarvin.livejournal.com/On LinkedIn!, Google+, and Twitter.Freelance Writer: ShadowrunLatchkeys: Nevermore, Latchkeys: The Bootleg War, and Latchkeys: Roscoes in the Night are now available on Nook and Kindle.
Dave-3000
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Don't ignore the insurance aspects, either. You're not covered under the employers workers comp policy anymore, so if you fall down their stairs, they aren't obligated to pay your rate or medical bills. And, they can fire you on the spot as you lay bleeding in their stairwell.

There is no "i" in team, but idiot has two.
Steve Jones
Steve Jones
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Good point on the insurance. Be sure that you carry some. It's not that expensive, but it's required by some companies that hire you and it's a good idea in case something bad happens.

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Matt Miller (4)
Matt Miller (4)
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We'll have to define "not expensive", because E & O insurance for a developer or DBA isn't cheap, especially when you're touching someone's production systems (even if not directly). Mine's run me upwards of an MSDN universal subscription per year (depending on the projects I've had to run).

I don't always maintain a lot of it, but I do try for a minimum. I've seen folks wiped out for a LONG period of time for something stupid done to another corporation's IP (what we tech-heads call "data").

Or - I'm going to need to talk to Steve's insurance man...Smile

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Your lack of planning does not constitute an emergency on my part...unless you're my manager...or a director and above...or a really loud-spoken end-user..All right - what was my emergency again?
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