6 ms·

Just create a company for yourself. When that sort of situation arose for me, it seemed mostly just that companies I wanted to work with weren't really set up

Just create a company for yourself. When that sort of situation arose for me, it seemed mostly just that companies I wanted to work with weren't really set up to handle individual freelancers. They weren't trying to scam me or let their buddies skim off the top. So, I made an S-Corp. Haven't had a problem since. Also makes it easier to do stuff like get project insurance, which some clients have also required. It's not expensive or time-consuming, you just have to jump through the hoops the bureaucracy wants you to jump through sometimes. And if that makes you uncomfortable, then you don't have to go after or take those kinds of gigs.

brightball 4y ago
Same. I have a personal S-Corp and haven't ever had an issue.
benjaminwootton 4y ago
It is not a silver bullet. Most big companies (the ones with the big budgets) will not want to onboard a new supplier if they can avoid it. Though clients tend to overestimate it, it takes a lot of time, legals, resources etc to get a company successfully onboarded. And (in response to the OP) in the unlikely circumstance that you do, 9 times out of 10 you will be signing their paperwork apart from minor redlines.
- ModernMech 4y ago
  Indeed, I contracted with a company that wanted me to get some insane professional liability insurance, which would have cost a huge chunk of what they were willing to pay me. I told them sure, but I'd have to charge more due to the increased overhead, and then they relented. Point is it could have gone the other way, where they just said thanks but no thanks. Then it did in fact take a long time to get onboarded, to the point where I didn't even have repo access for half of the contract. The experience wasn't great, and I doubt this company will do the same again.
  - Scubabear68 4y ago
    In the US, usually most established companies want a $1 million pro liability insurance policy, which should only cost a few hundred dollars a year (certainly we’ll under $1k). Startups..vary quite a bit.
  - newaccount74 4y ago
    My experience with business customers is that they often have lots of tedious requirements for vendors that disappear as soon as you tell them that they cost 2000€.
systems_glitch 4y ago
Went the LLC route, got professional insurance (megabux of insurance is actually not that expensive), those two tick most of the boxes for most potential clients. Individual experiences will vary of course, and there are totally folks out there who want to kick their friend's middleman business everything they can.
- moralestapia 4y ago
  >got professional insurance Can you recommend some companies that do this? Edit: Oh wow, I just made an online quote and it comes down to about $500/year. Dirt cheap for having peace of mind.
  - csomar 4y ago
    Check the policy terms.
    - systems_glitch 4y ago
      Definitely this. I went through a local insurance agency. I'd had experience with them when getting commercial insurance on one of my trucks (box truck used for transporting equipment to and from customer sites) and had a very positive experience in dealing with them. Do be weary, many insurance folks are individuals who decided they were going to sell insurance, took some minimal training, and are basically involved in "insurance" pyramid schemes like selling annuities. Source: family doing that stuff
- Scubabear68 4y ago
  Same here, single person LLC awhile back. The big advantage of this route is you have much wider discretion to define your salary, business expenses, what you can claim on taxes, etc. It was really eye opening to me what the accounting possibilities are. The downside is you need an accountant (or be very good at it yourself), and of course you need steady clients.
  - sokoloff 4y ago
EvanAnderson 4y ago
The "have a company" route isn't necessarily a magic bullet if you're not working with multiple clients. One of our clients (a Fortune 1000 company) had a program to weed out mis-classified contractors (individuals who really should have been employees). They demanded proof our LLC wasn't just contracting with them. It wasn't a problem for us, fortunately, but the one-man shop w/ a single client might not have fared as well. (It's also unclear to me why somebody would do that, but that's another topic...)
- r3trohack3r 4y ago
  This. I run a sole proprietorship LLC for platform engineering consulting services. I’ve had CA companies give me a hard “no” until they learned I was incorporated in AZ, living in AZ, and that a majority of the work would be performed remotely from AZ. As I understand it (second hand from these companies) they open themselves up to liability under California labor law if it’s later determined that contracting/consulting work was “misclassified” and “should have been employment.” I don’t personally know the reason for this, or what the liability is, but it seems like some companies are worried about having consultants/contractors later reclassified as employees. Me being in AZ has been the turning point for closing contracts though.
  - lazyasciiart 4y ago
    The liability is that it’s tax fraud. https://www.businessnewsdaily.com/770-contract-vs-employees-what-you-need-to-know.html https://www.businessnewsdaily.com/770-contract-vs-employees-...
    - bdw5204 4y ago
      The 1099-NEC form you receive instead of a W-2 for contractor income even has instructions for how to report your employer to the IRS if you think you've been misclassified as a contractor instead of an employee. I'm sure the IRS carefully investigates all such reports to secure every single penny Uncle Sam is owed in back taxes and penalties.
  - 4y ago
rukuu001 4y ago
Yes, this is the logical next step. Yes insurance. You might need to present some kind of documentation about risk management and security policy. But not always. Some orgs will balk at bringing a new supplier on, but if you’re dealing with a capable operator they’ll find a way to get it done (ie tick right boxes without getting actual procurement involved) Good luck, it’s worth it!

brightball 4y ago

Same. I have a personal S-Corp and haven't ever had an issue.

benjaminwootton 4y ago

It is not a silver bullet. Most big companies (the ones with the big budgets) will not want to onboard a new supplier if they can avoid it. Though clients tend to overestimate it, it takes a lot of time, legals, resources etc to get a company successfully onboarded. And (in response to the OP) in the unlikely circumstance that you do, 9 times out of 10 you will be signing their paperwork apart from minor redlines.

ModernMech 4y ago
Indeed, I contracted with a company that wanted me to get some insane professional liability insurance, which would have cost a huge chunk of what they were willing to pay me. I told them sure, but I'd have to charge more due to the increased overhead, and then they relented. Point is it could have gone the other way, where they just said thanks but no thanks. Then it did in fact take a long time to get onboarded, to the point where I didn't even have repo access for half of the contract. The experience wasn't great, and I doubt this company will do the same again.
- Scubabear68 4y ago
  In the US, usually most established companies want a $1 million pro liability insurance policy, which should only cost a few hundred dollars a year (certainly we’ll under $1k). Startups..vary quite a bit.
- newaccount74 4y ago
  My experience with business customers is that they often have lots of tedious requirements for vendors that disappear as soon as you tell them that they cost 2000€.

systems_glitch 4y ago

Went the LLC route, got professional insurance (megabux of insurance is actually not that expensive), those two tick most of the boxes for most potential clients. Individual experiences will vary of course, and there are totally folks out there who want to kick their friend's middleman business everything they can.

moralestapia 4y ago
>got professional insurance Can you recommend some companies that do this? Edit: Oh wow, I just made an online quote and it comes down to about $500/year. Dirt cheap for having peace of mind.
- csomar 4y ago
  Check the policy terms.
  - systems_glitch 4y ago
    Definitely this. I went through a local insurance agency. I'd had experience with them when getting commercial insurance on one of my trucks (box truck used for transporting equipment to and from customer sites) and had a very positive experience in dealing with them. Do be weary, many insurance folks are individuals who decided they were going to sell insurance, took some minimal training, and are basically involved in "insurance" pyramid schemes like selling annuities. Source: family doing that stuff
Scubabear68 4y ago
Same here, single person LLC awhile back. The big advantage of this route is you have much wider discretion to define your salary, business expenses, what you can claim on taxes, etc. It was really eye opening to me what the accounting possibilities are. The downside is you need an accountant (or be very good at it yourself), and of course you need steady clients.
- sokoloff 4y ago

EvanAnderson 4y ago

The "have a company" route isn't necessarily a magic bullet if you're not working with multiple clients. One of our clients (a Fortune 1000 company) had a program to weed out mis-classified contractors (individuals who really should have been employees). They demanded proof our LLC wasn't just contracting with them. It wasn't a problem for us, fortunately, but the one-man shop w/ a single client might not have fared as well. (It's also unclear to me why somebody would do that, but that's another topic...)

r3trohack3r 4y ago
This. I run a sole proprietorship LLC for platform engineering consulting services. I’ve had CA companies give me a hard “no” until they learned I was incorporated in AZ, living in AZ, and that a majority of the work would be performed remotely from AZ. As I understand it (second hand from these companies) they open themselves up to liability under California labor law if it’s later determined that contracting/consulting work was “misclassified” and “should have been employment.” I don’t personally know the reason for this, or what the liability is, but it seems like some companies are worried about having consultants/contractors later reclassified as employees. Me being in AZ has been the turning point for closing contracts though.
- lazyasciiart 4y ago
  The liability is that it’s tax fraud. https://www.businessnewsdaily.com/770-contract-vs-employees-what-you-need-to-know.html https://www.businessnewsdaily.com/770-contract-vs-employees-...
  - bdw5204 4y ago
    The 1099-NEC form you receive instead of a W-2 for contractor income even has instructions for how to report your employer to the IRS if you think you've been misclassified as a contractor instead of an employee. I'm sure the IRS carefully investigates all such reports to secure every single penny Uncle Sam is owed in back taxes and penalties.
- 4y ago

rukuu001 4y ago

Yes, this is the logical next step. Yes insurance. You might need to present some kind of documentation about risk management and security policy. But not always. Some orgs will balk at bringing a new supplier on, but if you’re dealing with a capable operator they’ll find a way to get it done (ie tick right boxes without getting actual procurement involved) Good luck, it’s worth it!