[thelist] Re: contract work questions

Techwatcher techwatcher at accesswriters.com
Wed Jun 26 12:39:08 CDT 2002

Hi, Sara --

I've been an independent contractor for almost 20 years (gulp). Here's
how it works (aside from the getting work part, which I'm really bad

First, make sure you qualify as an independent ACCORDING TO IRS RULES!
It's very important to note that if you work doing the Web-related work
only for the same company you work for in another capacity, you may not
qualify. (If you like, you can visit my site for writers, which has
some advice for independents: go to the Town Hall, and "walk through"
the IRS door at http://accesswriters.com/townhall.shtml )

Next, take my advice and DON'T charge your Web-related work (which you
should bill at quite a high hourly rate, if you know your stuff) when
your time was really spent learning or doing other non-productive (to
the client) work. That is, don't bill for the incidentals. Doing so
would alienate your clients or open you to having the work stolen.
Besides, it's bad for your integrity, which is probably bad for your
mental and spiritual health.

Now, if you did qualify as independent by the IRS rules, call them
(it'll take some time on the phone, but do it anyway) and get an EIN
(Employer Identification Number) for your consulting business. Use this
number when you report your CONSULTING earnings. Additionally, be sure
to pay estimated tax quarterly on anything you make. Each quarter ends
15 days after the third, sixth, ninth, and twelth month.

Note that anything over $400 per YEAR is taxed at the minimum of 15.3% -
- you won't be able to offset charitable deductions, your minimum
standard deduction, or anything else against that. You pay at least
15.3% "self-employment tax" on consulting income - (minus) expenses. So
tracking your expenses is even more important than tracking your time!
I'm not an accountant (or lawyer), so get this stuff checked out with a
qualified accountant if you don't have time to read IRS booklets. (For
one thing, that 15.3% probably increases for this year.)

Next: I use Ecco Pro (database program disguised as PIM) to track
everything in the world, and just export the appropriate columns
(including hours and rate columns) when I'm ready to print my invoices.
I print using a standard wp template, keeping all invoices in a single

Ecco Pro was killed by "free" release of competing program with nowhere
near the same functionality (guess what software company did that), but
it might be worth your time to contact Neal Gantz and have him sell you
one of the remaining available copies, and even train you in using it.
For what Ecco can do, keep reading in my Town Hall (ibid).
Alternatively, you might want to buy something like Quick Books, which
can also handle all the accounting problems you're about to have as an
independent consultant.

About independence:
Pro: the money can be good. If you're naturally good at networking, it
*will* be good, assuming you keep updating your technical skills and
stay healthy.
Con: practically all consultants are really selling their time, and
only part of the time invested is billable. So, if you have a family or
a time-intensive hobby or vocation (like writing), you have a lot of
additional hassles without a lot of benefit (apart from the actual
money itself).

Best wishes, and hth
Carol Stein
techwatcher at accesswriters.com0

> I have never done contract work before but I am right now. I have a
> completely non-computer job at the moment and I'm getting paid
> for that, but I'm also doing computer stuff (web dev and sys admin
> stuff) for the same people as contract work. They know I haven't done
> this sort of thing before and they'd probably be more than willing to
> help me figure out how to do things, but I'd rather find out for
> Anyhow, I need to bill them I guess and I don't know how that works.
> Everytime I do anything for them I keep track of how long it took and
> what I did and then I want to put together an invoice showing what I
> spent on what times the hourly rate, etc. I don't know how taxes and
> things are involved in this. I did several searches on google with
> various terms and I'm really coming up empty handed. If someone could
> point me to a good resource I'd really appreciate it.
> Also, I'm looking for some sort of program to do invoices with,
> preferably for linux, but I can use windows if I really need to.
> Something I'm looking for would have me enter the date/time/info for
> each task and it will tally up the hours and figure out the grand
> and print out something nice, if such a thing exists. I'd write one
> myself but I don't have the time for it right now.

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