Consulting in California

I'm about to leave the salaried workforce and become a consultant. I realize that I'll now be paying my own Social Security/Medicare taxes directly (along with fed/state income tax).

Do I need any type of business license since I will now be self employed?

Any tips will be appreciated.

Bob

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Reply to
BobW
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ize

=3D

I'm not an expert, but I have consulted part time.

Licenses are a local, city, or state function. Many states do not require them. Some cities and counties do.

Are you a P.E.? Professional Engineers have different requirements.

My one piece of advice is to get into your own LLC. It is very cheap, you can be sole owner, and it will save you bigtime if you make a mistake. As we all do from time to time..

Good luck. I did pretty well in ancient days, but my honey didn't like the irregular paydays. So I work for someone else. hmmm.

Reply to
Howhurley

Any lawyer worth his salt can dismantle a single-owner corporation in less time than it takes to tell about it. There are better ways of protecting assets than incorporation. See a lawyer that specializes in trusts and such.

Neither did my EX-honey. So now my now-honey and I work for ourselves. hmmmm.

Jim

Reply to
RST Engineering (jw)

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I've gone and bred a bunch of miniature humans (10), so the thought of child support is unacceptable, LOL So I stay married.

Reply to
Howhurley

Ok, Here goes...

First, decide whether you are going to go Sole Proprietorship, or something more complicated, like an S Corp. that determines what you need to do to file taxes.

You will need a tax id number from the IRS for your business, esp. if you do a corp. You will need to file all the payroll taxes on your salary (or income if SP) so you need to get used to all those tax forms.

If you live in a city, you probably need to get a business license, although as a consultant, you might be able to keep under the radar. Better to bite the bullet that get hit with a big tax bill later.

Charlie Edmondson Edmondson Engineering Inc.

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Reply to
Charlie E.

Thanks, Charlie.

It seems that Sole Proprietorship is the way to go, for me.

You've given me the direction I need.

Bob

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Reply to
BobW

ize

Go to the Nolo Books (Nolo Press) website. They have inexpensive books/software/forms to tell you what you need to do in an easy-to- understand way.

Reply to
Simon S Aysdie

Yep, much of the corporate protection is a myth, especially when the situation is in reality a camouflaged sole proprietorship. A good attorney should be able to tell it best. Ask him about "Piercing the corporate veil". If he doesn't know what that means look for a better attorney.

In California one must be extra careful. Some corporate structures pay a minimum tax. Meaning you'd owe tax even if you didn't make any money, for example when letting the biz peter out towards retirement. That would definitely not be cool.

My honey is actually quite happy with the fact that thanks to the Internet I can work mostly from the home office.

How is the smoke situation up there? Out here it's the worst we ever had, coughing the lungs out.

--
Regards, Joerg

http://www.analogconsultants.com/
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Joerg

The smoke is absolute garbage up here. We are about halfway between you and the Camp fire up in Paradise. We are about 500 meters south of the Grass Valley airport and the fire bombers are grounded for visibility. Isn't that just great? You can't launch the firetrol bombers against a fire that is grounding you for smoke visibility from the fire you want to put out.

We've got MAYBE a mile visibility and I was actually enjoying last week back in DC in that stinking sweat cesspool without smoke and cinders.

Jim

--
"It is the mark of an educated mind to be able to entertain a thought 
without accepting it."
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Reply to
RST Engineering (jw)

I didn't know where you were located. I used to get up to Grass Valley/Nevada City regularly to Silicon Systems/TDK/TI before they closed up that operation. Do you know a fellow, last name: "Fritz", raises horses?

I can see halfway to Tucson, about 50 miles ;-)

...Jim Thompson

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| James E.Thompson, P.E.                           |    mens     |
| Analog Innovations, Inc.                         |     et      |
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Jim Thompson

No, sorry. 35 years ago, this was a VERY small town. I knew almost all of the gang of the company that SSI bought to become the think tank for SSI, and played softball on the SSI team for half a dozen years -- still have the jersey in my collection. But no Fritz. At the time I moved up here, there were two electronics companies in town, Grass Valley Group and Grass Valley Instruments. GVG was bought by Tektronix, morphed a couple of times, and is back as an independent company again. GVI became Trilogy Design and is now a software company. RST Engineering retreated from 30 employees to honeyandme and does mom'n'pop avionics design and such. At last count there were over 100 legitimate electronics companies in the GV-NC area.

Coup'la stories ... RST once sponsored a female softball team. Read the regulations. Jersies had to have a "number". No other restrictions. We had pi, e, avogadro's number, charge on an electron, and all the rest of it. Next year they rewrote the rules to be positive integer. OK. 1E10 is a positive integer. So is the square root of 2^4. They gave up.

Local county fair didn't have a homebrew beer category a long time ago. The did have "vegetable juices - other". I entered barley juice with hop flavoring and won first prize. Then they disqualified me for not boiling the beer before I sealed the jar. However, next year (and all years subsequent) they had a very well attended homebrew category.

Jim

Reply to
RST Engineering (jw)

Sno-o-o-ort! Don't you just love bureaucrats ?:-)

...Jim Thompson

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| James E.Thompson, P.E.                           |    mens     |
| Analog Innovations, Inc.                         |     et      |
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Reply to
Jim Thompson

Exit the frying pan. Welcome to the fire. Are you *SURE* you want to do this?

Yep. You'll be paying the other half of about 15% self-employment tax. Think of it as a 7.5% cut in pay.

Oh yes. City, County, State, and Federal bureaucracies all have taxes, permits, deposits, and licenses depending on what you're doing. With your vague description, it's kinda difficult to itemize them. There will be the usual fictitious name, fingerprinting, Fed Tax ID, Fed employer ID (EIN), State Franchise Tax Bored ID, County business license, City business license, sellers permit, resell number, ad infinitum. (Most of these are the same as your SSID for a sole proprietership). Some cities tax business property.

You might want to talk to the local SBA (Small Biz Admin) for classes and literature.

If you're considering a home office (for tax deduction purposes), there's a mess of documentation that needs to be saved as the Feds consider you guilty until you can prove otherwise.

Starting a Business (in Calif).

Your unspecified county and city will have similar web pages on how to start a business in their jurisdiction. For example, here's something on starting a biz in Santa Cruz County:

Incidentally, don't be surprised if you're asked to post a bond or deposit against future tax payments.

One big problem is that you should plan all this out BEFORE you empty your cheque book. The problem is that it's rather difficult to undo any bad decisions. I checked the wrong box on the State Franchise Tax ID form, and was immediately faced with a $6,000 deposit (which I wiggled out of). I also had some baggage left over from several businesses that I ran in Smog Angeles, but didn't close down very gracefully. It was eventually untangled, but I would have preferred to avoid the whole mess.

After you get the legal stuff done, think about how much insurance you want to carry. If you have employees, Workman's Compensation insurance is kinda pricey.

On the personal level, keeping your business activities separate from your personal activities is be messy. Think ahead about how you're going to prove to the IRS that your latest toy purchase was really a business expense. Separate bank accounts, credit cards, etc.

One shock when I went into business for myself was having to pay for office supplies. In the past, I just stole them from my former employers. The stuff can really add up. However, as my customer base increased, I can now steal my office supplies from my customers.

A really serious problem is separating my friends from my customers. There's almost identical with one important exception. My customers pay me, while my friends do not. Turning friends into customers is theoretically possible, but generally difficult. Converting customers into friends is generally a bad and unprofitable idea.

After you're done with the basics, you'll soon run into a major problem deciding how your going to charge for your services. That's not an easy thing to do. Talk to your competitors, get their rates, and especially get their billing payment policies. I suggest you avoid all discount structures as customers do compare notes. If one is getting a discount, while others are not, you're going to lose the others. However, 2% NET 10 for early payment is generally a good idea if you're starving. Try to remember that your purpose is to seperate your customers from their money and that philanthropy is not in the business plan. (Translation: Be greedy).

Good luck.

--
Jeff Liebermann     jeffl@cruzio.com
150 Felker St #D    http://www.LearnByDestroying.com
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Reply to
Jeff Liebermann

Jim,

What sorts of widgets were you making back when you had 30 employees?

---Joel

Reply to
Joel Koltner

I'm amazed that more companies don't just send someone to, e.g., Wal*Mart rather than getting everything through Staples or OfficeMax -- seems like everything from the later are often 2-3x as expensive.

If you attend a trade show you should be able to easily get at least 50 pens and a half-dozen notepads. :-)

Reply to
Joel Koltner

It's similar here. We also have another fire east of us. Yesterday just a few minutes outdoors and I had a taste in my mouth as if I had just licked an ash tray. The day before the pool capsized into an algae pond. Cleaned it up but with this "climate" it's only a matter of time until it happens again.

Most everyone does out here. The SW guy I network with has a horse ranch. So does the technician who performs the final production test of one of my designs at a local client (they actually have a horse riding school as well).

Do they still have that daily inverted smog bowl over PHX? Ok, ok, I know you guys say "it's just dust", but it sure stinks.

--
Regards, Joerg

http://www.analogconsultants.com/
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Reply to
Joerg

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Remeber too, that (at least in our state), you can also register a d/b/ a name even if you are a Sole Proprietor. That will give you "some" illusion as being a "company" without actually having to register as such. Also, you will be able to set up your bank account under the d/ b/a name, and your clients can write their checks out to the "company" instead of your personal name.

Personal name can make you look small, and unfortunately, you are likely to be treated as such by certain clients.... :(

Good luck in your new endeavor!!

-mpm

Reply to
mpm

I was a big fan of Heathkit when I was a young person and stole a page right from their book (*). I did a market survey and found three corners of a geek triangle ... if you were "into" electronics either as a professional or avid hobbyist (ham radio, etc.) then the odds were about 1:4 that you were also into flying or photography ... this survey was done rather informally back in the late '60s, early '70s. Today's data may be skewed.

However, I figured that a 25% market to sell to wasn't a bad gig, so I brought out a simple kit switching panel for two aircraft radios with (gasp) a 5-watt Fairchild audio chip for a speaker amplifier. Damned thing would oscillate quite nicely over a fairly broad temperature range and would catastrophically explode if you looked at it crosseyed, but what the hell, it was the best thing on the market.

We couldn't keep the damned things on the shelf, and my thenwife and I made the deal when we got to $1k a month in sales she would quit her job and when we got to $2k, I'd quit my job and we'd go at it full bore. Three months later we hit $1k and she quit CDC; three months after that we hit $2k and I quit Teledyne. The next month we did exactly $10.50 worth of business and it was weenies and beans for the whole month.

But it rapidly picked up. We added a navigation (marker beacon) receiver to complement the audio panel, then a Wilkinson splitter to divvy up the VOR/LOC signal for two receivers, then a six channel crystal controlled transceiver, then "plastic plane" antennas, then headsets, then a full-house

720/200 channel transceiver, then a LORAN, then ... and I was working full-time on the old end-of-the-money before the end-of-the-month ulcer when I said to hell with it about ten years ago. Back to half a dozen products without too much service hassle and I'm making as much now as when we had all the employees.

My advice to anybody starting in business today ... subcontract is the only way to go. Everybody stays much happier that way.

Jim

(*) Back in '74, Fairchild came out with a clock chip that made aircraft digital clocks fairly simple to design and implement. I came out with my design in January, and Heathkit came out with their design, same chip, same design somewhere towards the end of the year. I noted that they made the same error on their schematic that I did ... coincidence? I think not. jw

--
"It is the mark of an educated mind to be able to entertain a thought 
without accepting it."
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Reply to
RST Engineering (jw)

Not nearly as much. Lots of County regs now requiring "oiling" of dirt roads.

...Jim Thompson

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| James E.Thompson, P.E.                           |    mens     |
| Analog Innovations, Inc.                         |     et      |
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Reply to
Jim Thompson

If parachuting counts as flying then count me in.

Don't you need STC blessings and all that?

Absolutamente!

Oops! But i wish Heathkit was still making kits. The current generation of kids is missing out on so much. Except that they don't think so with all those gizmos they've got. But creativity took a nose dive.

--
Regards, Joerg

http://www.analogconsultants.com/
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Joerg

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