Thanks Sean. :)

and remember, you REALLY REALLY needed that new 17" powerbook. for work. and stuff. ;)

More like $74k ;-) Standard is to take the hourly rate and double it. Basically there are 2000 operating hours in a year (ok, so its really 2080, but people get "vacation" like xmas and the like that contractors don't get paid for).

You can't actually deduct milage to and from unless you have multiple destinations, etc. your first destination is always considered your "primary" location. Oh yes, and you have to keep track of all the milage on a log so that "when" you get audited, you can prove the deductions.

I've been doing contracting for years and its a tough sell sometimes to get enough deductions. If you make enough, its better to find something local that you can call an office (like one of the the exec-offices) that costs around $200/mth, call that your primary work space, write off the milage from there to the job site, write off expenses for the work space, the computer, laptop, etc. Of course if you actually go to this length, then you want to build a real consulting firm/gig for yourself.

Otherwise, the taxes that you can write off aren't all that great for contractors. Basically the only reason to do contracting otherwise is because you are being paid the extra that would have gone to benefits, you can't get the job any other way, or you just wanted something for a short time (ie, 6 mths or less). Other than that, its always better to be an employee.

As a contractor, you have no health benefits unless you buy them yourself (or go through an agency that charges 30% or more for the service), you have no workmans comp for times when you can't work. No disability insurance, no life insurance, etc.

Common misconception is that contractors "make" more money. They only make more money if they are taking risks by *not* having things like insurance, etc. And as a contractor (1099) you also pay the entire taxes to your account. Meaning that you pay both your piece and the employer piece of SSN taxes, etc. So your taxes actually go *up* when contracting. You just get the privledge of figuring out your schedule "C" and playing with those numbers hoping you don't do anything that triggers an audit (they are *NOT* fun at all, I've had three).

With all that said, there are a lot of advantages of consulting/contracting. One is that its not "bad" when you quit or move on in less than 18 months. As an employee, you need a good reason for changing jobs in that timeframe, as a contractor, no one cares. If you do contracting right, changing jobs actually helps you in that you get exposed to a lot of different methods of doing things from various different companies, both good AND bad (you learn more from the bad actually). In addition, if its really bad, you can walk away and find another contract :-)

Marcos

P.S. For a contactor, unless you are going through a contract agency and the $37 is "your" take of the money (with the contract agency doing your taxes, benefits, etc for you), the business is getting a deal on you. They are placing the "risk" on your shoulders for all things like tax filing, benefits, etc in your hands...

And check out Portable Employer of Record services . . . .google that phrase or look at wikipedia:

en.wikipedia.org/wiki/Port..._of_Record

Free Association mentions www.MyBizOffice.com here in this thread (see above). They coined the term PER (portable employer of record) and have been in business for 20 years. I work with them and am thrilled. Our clients are stellar . . . Sprint Nextel, HP, the US Gov, IBM, Lockheed, Morgan Stanley, Microsoft, BAE, BearingPoint, Booz Allen Hamilton, etc etc. Becoming an Associate (a W-2 employee) of MyBizOffice means you are on the vendor list for every one of our clients. This has the potential to dramatically streamline your process of getting a contract. Simply being able to approach a company about a project and say, "Hey I'm on your vendor list . . ."

This kind of workstyle can't solve the problems mentioned by Jason -- if a company culture disrespects contractors -- but can solve or mitigate the other complications working as a 1099 present.

I do want to mention that if you're billing less than $40 an hour this is probably not a good option for you. In fact contracting as a 1099 or self incorporating are probably not a good equation at that bill rate. Handling your benefits premiums to stay covered (errors and omissions, general liability, life insurance, long and short term disability, medical and dental, retirement savings, etc etc) on top of the cost of living where most of these jobs are located may be difficult. I would recommend you negotiate your rate upward or run like hell . . .unless its a job in Montana or Topeka, Kansas.

For consultants billing over $80,000 a year, having a portable employer of record like MyBizOffice is a very attractive proposition, and you'll end up with more net cash even after considering the modest administrative fee (usually 4%, but sometimes sponsored by the clients). The benefits of not having to pay self employment taxes, getting reimbursed for your expenses every payroll, and real group health benefits (rather than self-insuring) are good for your bottom line. E&O and GL insurances are included in the whole deal, so your bases are covered.

By contrast, a staffing company takes anywhere from 25% to 40% of what is being billed to the client before you see your share (hmm . . . 4% or 40%, let me do that math).

And if you're an S-Corp or a 1099, not only do you have to deal with your bookkeeping and quarterlies, but you are much more likely to be audited than a w-2 -- one stat says seven times more likely to be audited.

If you're billing less than $70 or $80k a year it could still be worth it to you, but your net cash increase won't be as striking, or you could end up with a slight net cash reduction -- which could still be worth it depending on your situation. We have a very cool payroll estimation worksheet, if you want to walk through it with one of our enrollment experts you can fill this out:

www.mybizoffice.com/servlet/entry

There is a "join" button at the bottom of the screen, click it and fill out as many details as you know about now. There is a contract page, and you can read that, but don't sign anything until you've read it and thought about everything fully. You can click "sign later" and keep going through the form. You'll be contacted by an enrollment specialist, and that person will calculate what your take-home will be.

The worksheet is extremely detailed, and the more information you can put into it, the more accurate it will be. We'll put in the bill rate, your tax status information for both state and federal taxes . . . .we'll estimate all of your benefit premiums and your retirement contributions (we have a real 401(k) so you can make pre-tax contributions). We will estimate every single business expense you can take, from travel and per diems to pens and continuing education. This form, accurately filled out, will estimate your take home and help you determine if this is a sustainable and fair billing rate.

Hope that helps . . .