the state your in should have self employment information on their website - i can't tell you specifically where to look as i only briefly freelanced for about 3 months a couple of years ago. from what i gathered then (i'm in colorado) you didn't need a registered business name as long as you were operating under your own name only. as soon as you call yourself something else, you need to register, etc.. .

are you looking at doing this full time, or just on the side for a few hours?
i got out of it because you pay typical taxes & self employment tax...which essentially means you pay double taxes. my taxes worked out to be somewhere between 25-30% of what i made. not worth it for me doing it full time.

you need clients

And extra time, if you're doing it with your day job. Autocad for 8hrs/day and then another 6hrs @ night can get exhausting.

although in day to day work, i am a fulltime employee, in reality i am an independent contractor.

what you need is for people to fill out 1099's for you. i do have a business name, but i don't think that's required for 1099 work. at least not where i am.

you need to pay your own taxes sure, but the self-employment tax is double that which you would pay working for someone else as w3 mentioned.

you'll also need (probably) to pay taxes quarterly. i've set up with my accountant 1/4 of my projected payments, the first of which is due next week for FY2007.

then you want to consider (if this is a long term affair) a Self Employed Pension which is a retirement account much like a Roth IRA but with taxes when you withdrawal money later and a higher deposit allowance. Up to $42K per year i think.

it's true the taxes are brutal - i paid a full 25-27% for 2006.

for me right now it's all about what my current opportunity is. i'm not worried about the tax liability right now because the work is good right now. this time next year i'll renegotiate everything.

Something else to think about as contract labor is that w/o the proper contracts you could potentially bear liability for mistakes you make where as an employee your employer takes that responsibility. If you're liscenced thats another story, but if not I'd be careful. There is a lot of people who are willing to give work and responsibility to individuals who aren't ready for it if the price is right.

that's another good point.

i've been meaning to go over that one with the principal here.

any further clarification on that w3? am i exposed to liability as a contract worker for this sole-proprietorship?

i should talk to my lawyer too i think.

ML - to be honest i don't know how it would break down, and i might be wrong as i've never actually looked into how the legal system would view the contractors responsibility in this particular situation. however, practically it just seems like if you screw up on your portion of the project and there is an expensive fix in the field your boss would have the power to hold you responsible for that error since you're not technically his employee.
If you're in it for a while I'd say it's totally worth it to go over things with your lawyer. It seems like a well written contract between you and your employer could easily cover you even as a contracted laborer - in fact I probably woudn't work without one. Or easier yet - just have them make you an employee....but of course you give up the freedom of being "self employed" when you do that.

i setup my company as an s-corp for liability reasons.... so anything i do, i have them cut a check to my company...... then i can do write offs/etc.... reason for this is the field of work i was in.... from models to interiors to design build....... if you plan on staying/doing freelance then start a small company so you can grow it and get your name out there.... companies like to cut checks to other companies and not to people.... it also shows your clients that you are a company.......gives them a piece of mind sometimes


b

there is an article in this month's architectural record discussing some of these issues... although it is written more about the other side of the issue, for the firms that are hiring independent contractors...

Thanx for the info.......

I found a lot of good information..on the state website.. too thanx