Keep up the good work

I run a cad outsourcing company. We have actually outsourced some of our newsletter work in the past when we didn’t have the staff time available to do it onsite. The things that we looked for were adherent to schedules and legitimacy (ie. tax wise).

Richard S.
CAD-Sourcing- structural, architectural, mechanical, and civil drafting.

Set yourself up as an LLC or s-corp, get a federal tax ID number (FEIN), talk to an accountant, and make sure you’re all legal. All that might sound overwhelming, but trust me, it’s not. Before I started my consulting business, it seemed overwhelming, but as I went through the steps, it was actually really straightforward. Make yourself a checklist of start-up tasks, and work through them–you’ll be done it fairly short order.

As for the tax issue, I’ve seen that become a headache for other consultants who didn’t plan correctly. After discussing my situation with a CPA, I chose to form an s-corp, and have been very happy with the choice. With my s-corp, I’m the sole employee, and I pay myself a salary (and take distributions as well). As for health and retirement benefits, my s-corp pays 100% of my health insurance premiums (which is essentially like saying that I pay my health insurance with pre-tax dollars), and I have a SEP-IRA which provides equivalent retirement benefits as a 401(k), without the administrative costs and with unlimited investment choices. Paying myself a salary through the s-corp saves on income taxes, since any distributions from the corporation are taxed as regular income, and not subject to social security & FICA taxes.

I’ve seen 2 things sidetrack and/or stymie aspiring freelancers/consultants:  fear and finding clients.  I talk about both those issues on my blog, and recently posted a couple of articles on ways to find clients (http://www.startmyconsultingbusiness.com/tired-of-scrambling-for-business-surprising-and-proven-ways-to-get-new-clients-part-1/). My blog also gives specific tips, tricks, techniques, and tools for starting and running a successful freelance/consulting–or any–business on the cheap.

If you do something on your business each day, you’ll see how your efforts snowball. Not only will you have all your start-up tasks completed–meaning that you’re all legit–but you’ll notice that you start thinking more like a business owner instead of an employee. You’ll see opportunities and prioritize which ones you want to pursue. You’ll think of ways to get new clients and expand the work you do with existing clients.

Having your own business is hard work, but in my experience, the income and rewards (flexibility, autonomy) are FAR greater than you get as an employee.

You can check out an interview I recently did where I talk about how I made the switch from employee to consultant, and where I talk about some of my initial fears and doubts:
http://www.startmyconsultingbusiness.com/how-i-made-the-switch-from-employee-to-consultant.

Greg Miliates
http://www.StartMyConsultingBusiness.com

It will be great if you can throw some insights on that topic.