pcuz

Guys,

Can anybody point me towards good information on how you can go IT contracting in the US?

I am working full time now and I am thinking about going contracting like I used to in the UK and just need to know what is involved.

Thanks!!

meauxna

What is your current immigration status? L-1?

ian-mstm

You would need permission from the US government to accept IT jobs in the US... but, if you are already in the US on an employment-based visa, you can work only for your US sponsor and can't contract out your services.

Ian

pcuz

I am a perm resident so thats not a problem. More intrested in setting up a company etc and all that stuff...

Michael

First you will have to check with your city/state to determine if you need a business license (may possibly not be required if you don't have a place of business or clients visiting your home office). After that the only thing required is that you pay self employment tax (same as social security and medicare tax on your income but is double the amount but if you are doing it as a second job, you may already be fully paid for the social security part if your salary is high enough) and file quarterly estimated income/social security/medicare taxes.

The only other thing is that if you want to protect yourself from lawsuits (possibly even from bills if the company goes bankrupt and bills were in the name of the company), you could set up an LLC or a S type corporation.

anuny

Most people do either S Corp (Check nystate.gov) and if you are an SME (Subject Matter Expert) then you could work as a 1099 worker. And if you are a sub for a larger IT consulting firm, you could become a W-2 worker.

YMMV

tallstar

Hi, I am an IT contractor in San Diego.

It is complex, the law is different in each state and it changes annually. So my best advice is to find a CPA (certified public accountant) and discuss which type of trading entity to set up and then arrange company formation with them. The type will depend on whether you are a sole trader, you ever want to employ others, your anticipated gross turnover, where you will trade, whether you will provide just services (time) or sales of goods (software). Note that the papers to set up my company in California needed to be executed in the state capitol (Sacramento more than 500 miles away) more or less by hand!

I operate via an LLC registered in California (Limited Liability Corporation), but did consider registering in other states as my agent is based in GA, but I found it is actually best to register near your residence. I did review alternatives to LLCs, but in conversation with my CPA, he advised me of likely upcoming changes to legislation (like 200 pages of it), weekly bulletins containing new interpretations, and many many other factors. In the UK, I would simply review most of the rules for myself, learn about IR35 from online websites and instruct my accountant on what to do. Here, it is completely the other way around. There is no way I would have time to learn or keep up to date with all the Federal and State regulations. So my CPA does this for me.

You'll need liability and indemnity insurance and may, depending on the state and size of company require Workers Comp. There are Federal and State forms to complete, I found quite a lot of help on these online. What you will need out of the process is your business Federal Tax ID, which is the EIN. This will allow you to open a business bank account and start working and invoicing.

Then you get a contract, start working, do your time/expense submission, invoicing and your company gets paid. My other advice is that you need to take responsibility for ensuring that all of the people in these processes know what they are doing, have actually done it to the point where there is nothing more to do, until you are confident they have been trained lol. In my case, expenses would sit in an email account with no one assigned to review and approve and so on. So you'll need to email and chase. Now that all those in my process have been trained, I don't have to chase any more and my timesheets and expenses get approved on the weekend!

The main upside for me is that I can take as much vacation as I want, although unpaid. I'd been headhunted to Cali several times in the past, but never could get past the 2 or 3 weeks of vacation barrier (I need at least 6 lol). Contracting allows you to be in control.

Don't forget your health insurance and to maintain detailed records of every expense. There are a lot of deductibles - your CPA will supply details of what's allowed.

Good luck! Rich, San Diego, CA

GeoffM

Useful for me too - thanks!

Michael

The information is very useful but you may not need to go through the hassel and cost of setting up a LLC or a S corporation if you are the only one contracting in a business such as IT. If all you are doing is contracting yourself out to write programs or other IT services, what possible liability could you create and it is unlikely that anyone would loan your LLC or S corporation money.

Also there really isn't any major tax advantages of an LLC or an S corporation since you are taxed as if you are self employeed.

My son set up a LLC because he and two partners had a office and when they closed down, they were able to discharge the contract for the office lease and internet and phone contracts against the LLC (they got those companies to write the contract against the LLC). However they got stuck with the debt for the credit cards and leases on computers since they could only get those if someone signed a personal responsibility for those items.

GeoffM

That all depends on the field you work in and what the contract says. Games, probably not; safety related or, even worse, safety critical stuff, a huge amount of liability.

But in any case, Rich's and your information is useful in general, not specific to my situation but closely related.

Bob

Don't discount it, Nintendo require a certain level of liability insurance to work on their platform and you need it up the wazoo in case you lose a $20K console dev kit. So it's not so much a case of your code causing a crash, but if you break dev gear.

Michael

The protection of an LLC or an S Corporation is usually only valid if the contract is made against the LLC or the S Corporation. For example if you signed a contract stating that you will provide certain services to another company, you may not be protected but if the contract states that your company is being hired to provide you as an employee to provide the services, you are likely protected.

Normally there isn't a problem getting the protection if the contract is on a document with the company letterhead since the employee signing the document is assumed to be a representative of that company and the person getting the services assumes they are hiring the company to perform the services.