Consultant Offer

[Born2Fish]

The HR manager at a manufacturing facility near me called and asked if I would be interested in an independent Controls Consultant part-time job.

I had sent them a resume for an engineer position four years ago before I moved to the coast. They made an offer but I ended up taking a higher paying job.

I will have been retired for 3 years in April.

I like retired life but wouldn't mind earning a little during the ongoing market/inflation environment. I also think I would like the mental challenge of resolving some of their repetitive equipment downtime problems.

Schedule is flexible. I plan to work 8-12 hrs per week.

I need help. I don't have a clue what I need to do in terms of liability insurance or whether I need to create/register as a Sole Proprietorship, LLC, etc??

I would appreciate any help/guidance you could offer.

 

[Ronstar]

Not sure whether a Sole Proprietorship, LLC, S Corp, or C Corp would be best for you, but you should create an entity that is separate from you personally - an entity that protects your assets. And the entity will probably need a Federal Tax ID. Payment should be made to your entity and your entity should have a checking act.

And you should have E&O (errors and omissions) insurance / Professional Liability Insurance for the entity you create.

You may need to personally capitalize your entity before starting work to pay business startup costs.

And you need a contract between Mfg firm and your entity spelling out terms by which manufacturer facility secures the services of your entity (not you personally)

My advice is to hire a business / contract attorney for advice and setting up your business.

 

[38Chevy454]

Can the company just hire you as a part time W-2 employee?

 

[CardsFan]

Can the company just hire you as a part time W-2 employee?

Or go through a temp agency. The company will pay a premium, but as long as you get the wage you want I think this would be easiest.

 

[Aerides]

It is a lot more work (paperwork, expense) for you to do this as a contractor vs. an employee. Taxes alone...So whatever hourly rate you were thinking? Double it to make it worth that.

Push for W2, far easier.

 

[Sunset]

I used to consult as a Sole Proprietorship with E&O insurance and it worked out fine, but I had to keep the E&O insurance for 2 yrs after stopping work, to wait out the IL statute of limitations time period to make sure I was covered.

If I were to do any again full time, I'd go with an LLC, and E&O insurance for more protection, and continue my self 401K stuffing.

For a part-time thing I think the idea of W-2 is best to avoid liability and simplify, and use the company 401K Roth , for stuffing $$.

 

[Exchme]

If you are interested, you need to ask them about the specific arrangement - do you cover both sides of SS, carry your own insurance, or are there other arrangements.

For instance, we use a single contract agency for all contractors. Alternatively, we hire "casual" employees 0-20 hours per week, with no benefits, but still direct employees so the company pays their side of SS and no professional insurance needed.

But don't let those details get in the way of assessing what's really important -
Do you want the job?
Is the money worth the time?
Will it be interesting?
Are your skills and mind still sharp?
Are the people and corporate culture a good match?
Can you put up with the hours, commute, effort, deadlines, personalities and corporate hokum that comes with the paycheck?

 

[qwerty3656]

I worked as a 1099 employee (you get a 1099 rather than a w-2) for a few years. I'm not aware of any need to have liability insurance. I had a separate tax-id, but I don't think you need one. You will need to pay your own taxes (there is no withholding) and keep track of reasonable expenses (can offset income).

 

[freedomatlast]

I worked as a 1099 employee (you get a 1099 rather than a w-2) for a few years. I'm not aware of any need to have liability insurance. I had a separate tax-id, but I don't think you need one. You will need to pay your own taxes (there is no withholding) and keep track of reasonable expenses (can offset income).

I agree. I also worked as a 1099 employee that was through a consulting employment agency. The employment agency paid the liability insurance for all of the consultants that they placed and the 1099 wages were paid by them. I did not set up a separate tax-id but definitely make sure you estimate and set up quarterly tax payments to for federal and state taxes. This can be very lucrative and rewarding and you only do the things that interest you and that you want to do.

 

[Born2Fish]

I need to get an estimate for the Business entity setup, Liability, and E&O insurance.

This is NOT a high paying gig...

 

[38Chevy454]

I need to get an estimate for the Business entity setup, Liability, and E&O insurance.

This is NOT a high paying gig...

If you can't get on as a W-2 employee, then pursue the temp agency route. Since you say not a high paying job, make it easy on you and let them figure out a way to have you as an employee or you are employed through the agency.

 

[Sunset]

I need to get an estimate for the Business entity setup, Liability, and E&O insurance.

This is NOT a high paying gig...

If you set up an LLC yourself, it will cost a couple of hundred, the worse part is the yearly filings you need to do.
E&O insurance is pretty cheap, I paid $500/yr for it.
As a self employed you can set up a self 401K (IRA and ROTH) and fund it to a max of ~$55K/yr if you make a lot, otherwise about 25% of net earnings.

But if it's not high paying, tell them you will do it only as a part-time employee so your life is simple.

Why do you think it's not high paying ? Of course to some high paying is $60/hour to other's it has to be $500/hr so maybe it's a definition thing.

 

[Born2Fish]

If you set up an LLC yourself, it will cost a couple of hundred, the worse part is the yearly filings you need to do.
E&O insurance is pretty cheap, I paid $500/yr for it.
As a self employed you can set up a self 401K (IRA and ROTH) and fund it to a max of ~$55K/yr if you make a lot, otherwise about 25% of net earnings.

But if it's not high paying, tell them you will do it only as a part-time employee so your life is simple.

Why do you think it's not high paying ? Of course to some high paying is $60/hour to other's it has to be $500/hr so maybe it's a definition thing.

Offer is $65/hr.

I want to gross around $20k/yr. So, my ideal schedule would be to work 1 day/week, 40 weeks/year.

What are the “yearly filings” that I need to do.

Don’t I need to buy both liability insurance and E&O insurance?

 

[Sunset]

Offer is $65/hr.

I want to gross around $20k/yr. So, my ideal schedule would be to work 1 day/week, 40 weeks/year.

What are the “yearly filings” that I need to do.

Don’t I need to buy both liability insurance and E&O insurance?

The yearly filings would be if you get an LLC. It's basically to say the LLC is still around, depends what state you create it in. It's been over a decade so I can't be more detailed. The filing fee varies, but around $100 again depending upon the State.

I got my insurance from Hiscox, for me error and ommissions coverage was my liability, it was never tested by me, so don't really know how well it would have worked out.
https://www.hiscox.com/

 

[rothlev]

The HR manager at a manufacturing facility near me called and asked if I would be interested in an independent Controls Consultant part-time job.

I had sent them a resume for an engineer position four years ago before I moved to the coast. They made an offer but I ended up taking a higher paying job.

I will have been retired for 3 years in April.

I like retired life but wouldn't mind earning a little during the ongoing market/inflation environment. I also think I would like the mental challenge of resolving some of their repetitive equipment downtime problems.

Schedule is flexible. I plan to work 8-12 hrs per week.

I need help. I don't have a clue what I need to do in terms of liability insurance or whether I need to create/register as a Sole Proprietorship, LLC, etc??

I would appreciate any help/guidance you could offer.

Probably the easiest set up would be an LLC report the income on a personal schedule C. Pay quarterly taxes, 25% of your gross income as an estimate, thou it will probably be higher. Look at your marginal tax rate, add in the FICA amount. FICA is around 15%. You do get a small tax break on the income. I wouldn't make it more complicated at this stage. U can plow some of the income into a self 401k or just a regular IRA. You can also write off some ordinary and usual expenses,

 

[target2019]

The HR manager at a manufacturing facility near me called and asked if I would be interested in an independent Controls Consultant part-time job.

I had sent them a resume for an engineer position four years ago before I moved to the coast. They made an offer but I ended up taking a higher paying job.

I will have been retired for 3 years in April.

I like retired life but wouldn't mind earning a little during the ongoing market/inflation environment. I also think I would like the mental challenge of resolving some of their repetitive equipment downtime problems.

Schedule is flexible. I plan to work 8-12 hrs per week.

I need help. I don't have a clue what I need to do in terms of liability insurance or whether I need to create/register as a Sole Proprietorship, LLC, etc??

I would appreciate any help/guidance you could offer.

Independent Consultant means more liabilty to you. When you mention Controls, that sets off my early warning system. That would be your greatest concern. Get firm quotes for the insurance side of this before proceeding.

As others mentioned W-2 is far less trouble to begin. Ask about that, and whether they use a particular temp agency.

I've worked W-2 and independent consultant, and W-2 was much smoother. Checks were auto-deposited very quickly. No chasing payments.

 

[Aerides]

Offer is $65/hr.

I'd say, make it $50 and make me PT (that $15 is still less than it would cost them to have you on the books, but probably more than your extra cost and time to make it work).

 

[Born2Fish]

Independent Consultant means more liabilty to you. When you mention Controls, that sets off my early warning system. That would be your greatest concern. Get firm quotes for the insurance side of this before proceeding.

As others mentioned W-2 is far less trouble to begin. Ask about that, and whether they use a particular temp agency.

I've worked W-2 and independent consultant, and W-2 was much smoother. Checks were auto-deposited very quickly. No chasing payments.

Yes, the professional liability risk is what stood out for me. Everyone is your friend until you make a mistake and the line is down for repairs.

I will ask about W2.

 

[Born2Fish]

I will try to talk with an attorney to get a feel for the time/cost involved to cover my risk. Hard to reach anyone during the Christmas-New Year holidays!

Thanks to all for sharing your experience, insight and suggestions.

 

[freedomatlast]

They may be lowballing you. Controls Engineer consultants around here get $75 to $100/hr and even more for some specialties.

On my first consultant, job, they tried to lowball me too. I just kept telling them no until they finally agreed to a much higher rate.

 

[Born2Fish]

They may be lowballing you. Controls Engineer consultants around here get $75 to $100/hr and even more for some specialties.

On my first consultant, job, they tried to lowball me too. I just kept telling them no until they finally agreed to a much higher rate.

Thanks for sharing.

All they can say is, "NO", right?

 

[MarieIG]

I will try to talk with an attorney to get a feel for the time/cost involved to cover my risk. Hard to reach anyone during the Christmas-New Year holidays!

Thanks to all for sharing your experience, insight and suggestions.

In this type of job, what's the most amount of damage that you could possible get blamed for? That doesn't mean that you caused it, BTW, but what could "fail" that you are attached to, i.e. costly equipment? Could personal injuries be involved? Specifics are not necessary, but think this through.

Since you would personally be providing the services, would you not be personally exposed to liability claims, notwithstanding the formation of an LLC? (What would stop a party from bringing a claim against both you and the LLC.)

The company most likely has layers upon layers of insurance (under which employees would be covered).

I suspect that it would be "safer" to be an employee . . . But of course, YMMV.

 

[Born2Fish]

In this type of job, what's the most amount of damage that you could possible get blamed for? That doesn't mean that you caused it, BTW, but what could "fail" that you are attached to, i.e. costly equipment? Could personal injuries be involved? Specifics are not necessary, but think this through.

Since you would personally be providing the services, would you not be personally exposed to liability claims, notwithstanding the formation of an LLC? (What would stop a party from bringing a claim against both you and the LLC.)

The company most likely has layers upon layers of insurance (under which employees would be covered).

I suspect that it would be "safer" to be an employee . . . But of course, YMMV.

I am still trying to get an attorney to advise me on coverages.

I may end up declining the offer or trying to negotiate a deal where I would work PT as a W2 employee.

 

[MarieIG]

I am still trying to get an attorney to advise me on coverages.

I may end up declining the offer or trying to negotiate a deal where I would work PT as a W2 employee.

If the potential client wants you so sign a contract - I would have the attorney look at that as well. (Also, a certificate of insurance is not an insurance policy, and the policy may contain exclusions which you do not want.)

Good luck.