Last Updated: 31 Oct 2023
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people:independent-contractor [Jun 28, 2010 01:59 AM] dordal |
people:independent-contractor [Oct 23, 2023 01:01 AM] 110.249.202.183 removed |
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+ | = Working as an Independent Contractor = | ||
+ | If you're in the software industry, you'll likely find yourself working as an independent contractor at some point. I've done this for my entire professional life with the exception of one seventeen month stint, and I like this side of the fence far more than I like the other side. | ||
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+ | Here's a guide for making the most of it. | ||
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+ | **Standard Disclaimer: | ||
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+ | == Setting up a Home Office == | ||
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+ | One of the biggest advantages of being an independent contractor is that you get to 'be your own boss' and work at home. This is one of the things I like the most: when the commute from bed to desk takes less time than the commute from bed to breakfast. | ||
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+ | Herein lies one of the biggest problems to staying motivated: when you're at home, possibly in your pajamas, with distractions all around, it can be tough to focus on getting work done. | ||
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+ | I strongly recommend that you setup a home office: a separate room, preferably with a door, where the work gets done. Put on real clothes in the morning, have a real breakfast, and then commute back upstairs to your home office and get to work. When you're done for the day, close the door and get back to the rest of your life. At least in my view, this work/life separation is critical to maintaining a long-term work-at-home lifestyle. | ||
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+ | Another advantage of a home office? It's tax deductible. See below. | ||
+ | == Keeping Records & Deducting Expenses == | ||
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+ | The second huge advantage of being an independent contractor is the tax benefits. If you're an IC, you're running your own business. That means you can deduct any legitimate business related expenses from your taxes. Need a new computer? It's tax deductible! Buying office supplies? Tax deductible. Driving somewhere? As long as you're going on business, the cost of the trip is tax deductible. | ||
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+ | You file your business income on an [[http:// | ||
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+ | A word on the home office deduction: if you have a home office, you can deduct the floorspace of the home office from your rent or mortgage payment. For example, if you have an office of 100sq ft in a 1000sq ft house, you could deduct 10% of your rent as your home office deduction. | ||
+ | == Paying Estimated Taxes == | ||
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+ | As an employee, your employer will withhold taxes from your paycheck, which is probably one of the most genius systems ever invented by a tax collection agency. They typically withhold a little too much, which means you get a refund when you file your taxes. Imagine that... the government will give you money, and all you have to do is file this piece of paper by April 15! | ||
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+ | As an independent contractor, you need to make sure that you make appropriate estimated tax payments. Your employer doesn' | ||
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+ | Depending on your perspective, | ||
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+ | == Health Care Insurance == | ||
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+ | One of the biggest concerns for independent contractors is health care insurance. In the United States, your employer typically provides a plan for you, but as an independent contractor you obviously don't have access to such plans. | ||
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+ | The difference may not be as big as you think; these days many employers are forcing their employees to pay an increasing large portion of the healthcare premiums, due to rising costs. Furthermore, | ||
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+ | In the meantime, there' | ||
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+ | == Retirement == | ||
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+ | As an independent contractor, you can take advantage of many different retirement options. There' | ||
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+ | == Licenses == | ||
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+ | Depending on your state and city, you may be required to get a business license |