Confirm Action

Are you sure you wish to do this?

Confirm Cancel
Member Login
Site Notices
10/20/2017 1:01:18 AM
9/22/2017 12:11:25 AM
Posted: 8/12/2005 8:44:33 AM EDT
Hi Everyone

I lost my job a few weeks ago and I am currently looking for other employment. My last day was going to be the 19th of August. The GM came to me today and asked if I wanted to stay as a contract employee until I found employment . We have not discussed pay rate.

Question: Are you aware of any issues I may have as a contract employee. I don't need benifits as my wife works for an insurance company and insurance is fully funded. Thanks for your imput.

Kind Regards

Link Posted: 8/12/2005 8:59:16 AM EDT
My wife and I have both take turns working as a contractor. I don't know your occupation, but we both typically work engineering type fields. We usually expect contract pay to be about 20% less than what they bill us out as to the client. (for example my wife maid around $24/hr. and was billed out at $69 at a former company, when laid her off and brought her back as contractor she gets $55 -$60 depending on task).

The IRS has certain rules to be a contract employee. Know them....to you they are a bill of rights. This is to prevent employers from hiring you as contract just to avoid the 7.5% FICA they pay (And yes, you will now pay this...this is noe of the reasons you make more...you would be paying 15% instead of 7.5%). I can't recall all of the guidlines but there are things like They can't require to work specific hours or a specific shift. They shouldn't provide you with a permenant desk, and this kind of thing. Basically, they need to treat you like an outside company/consultant. If you are just another employee, they need to make you an employee and give you the benefits.

It can be very profitable when there is work, but remember if there is now work that day, they say thank you, go home, and no pay.

We have bounced back and forth, always keeping somebody as an employee to keep the benefits. Make sure you get everything in writing up front, including travel time, expense reimbursemnt. These can become haggling points. As a contractor our office is our house. Our time begins when we leae our office, not arrive at their job. Also make sure you include in the contract that you get paid in a timely manner no matter the relationship is between your client and theirs (if applicable). We have had client who had projects get cancelled or fall apart to the point the did not get paid. Then they wanted to tell us that we would not get paid. That is a no go for us. Many of the clients want to give us a contract that says we get paid when they get paid. This is a big no-go for us also. We did this at first, but then some clients may not bill until a job benchmark (say 70%) that they do not attain until 6 monthes after our part was done. We put in up-front that all invoices are net 30.

Link Posted: 8/12/2005 9:13:44 AM EDT
[Last Edit: 8/12/2005 9:14:53 AM EDT by senorFrog]
Just get everything in writing. Make sure term and rate are specified. Don't do more than NET30. Ideally NET15. Make sure you can submit invoices weekly. Your hourly rate should be more than you were making salary. If your not going to contract long term have them pay you as a 1099 (make checks out to you) instead of opening up a SUB-S Corp. Sub-S Corp MAY be better if you plan on doing this for several years. The tax advantage is slight and the SUB-S is a pain in the ass when it comes tax-time. They should no longer be taking out Social Sec, Mediacare, State & Federal Taxes. As 1099 you'll have to pay those every 4 quater based on 100% last year taxes or estimated this years taxes. You'll be paying both ends of medicare and social security (right now you pay half they pay half), SO DON'T LET THEM CHEAT YOU INTO JUST GOING WITH YOUR HOURLY RATE BASED ON YOUR OLD SALARY! Also, get a guaranteed min # hours per week.

Good luck!
Link Posted: 8/12/2005 9:45:06 AM EDT
Thanks for the Info. What amount is typical for a contractor above and beyond the salaried rate. Say for instance I am making $40.00 per hour salaried, what is appropriate as a contractor.

Top Top