So you wanna be a consultant – Part 2

First off I’m sorry for the long delay between posts – all of a sudden I find I have more work than i know what to do with. ;-)  This is a good thing, right?

So the second part of my post is:

1099-Direct

This is probably the easiest type of consulting to do.  You work for an agency, Norwin, K-Force, and the like – they have a staff in place than handles the paperwork, invoicing, and such, and all you do is collect your check.  To start you go to the IRS website and fill out a simple form for an EIN – that is an employer ID number.  You fill it out as a “sole proprietor” and at tax time, all of the money that is made by the “Company” is transferred to you directly.

Pros 

  • Simplicity.  Most of us don’t want to spend a lot of time hassling with LLC paperwork, paying corporate income taxes as well as the hassle of paying yourself out of the company.  Just be sure you’re putting your 25% away for the quarterly taxes, because if, at the end of the year, you haven’t kept that up, well the fines are huge.  (If when you file your 1040 you owe more than 25,000, they peanize you for underwithholding, *AND* then require you to pay estimated tax throughout the rest of the year.
  • No Hussling.  If you’re working for an agency, you don’t have to get out and hussle up your next assignment, someone else is going to do it for you.

Cons

  • You still work for someone else.  Someone else dictates your schedule, you still have to request time off whereas when you’re doing project-based work, all you have to do is schedule yourself some vacation in between projects. 
  • Your “company” will never grow because it’s just you.  You don’t get to take advantage of the fact that being a “Corporate Consultant” puts you in a great position to recruit other consultants.
  • Benefits – you’re paying cash for benefits.  The quote I got for my family of five from Anthem was about $750/mo.  (just to provide a baseline)

That’s all I can think off off the top of my head, anyone got anything else?

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