[Tfug] Contract vs Part-time work?

[Bexley Hall]

Hi, Claude,

> So, I have an upcoming interview for some part-time work as
> a software tester.  As I understand it, the company hasn't yet
> decided whether the work will be listed as contract or part-time.
> If they ask for my opinion, I'm wondering if there's a benefit to me
> for one versus the other?  I haven't had the interview yet and,
> therefore, don't have many specifics.  But I don't that benefits
> (if any) would be substantial if I were to be employed part-time.
> Any thoughts?

"Part-time" is usually a euphemism for "no benefits".

You may need a business license (technically) to do contract work.
If the type of work you are doing is likely to expose you to
potential liability, you are best off incorporating.  Otherwise,
you can do it as a sole proprietorship.

As a contractor, you will have to pay "self-employment" tax in
lieu of the taxes that a regular employer pays on your behalf.
You will have to file estimated taxes (and pay quarterly) if you
expect your self-employment income to exceed your regular income
enough to ensure that you haven't paid at least 90% of your tax
bill before it is due (or, 100% of your previous year's taxes).
You will need a 1099 in lieu of a W-2 from the "employer".

In some localities, you have to maintain a seperate bank account
for (state) taxes.  Some places treat your services as subject
to sales tax (!)

There are a number of critical tests that you must meet for the
government (especially the feds) to consider you an independant
contractor and *not* an employee.  These are VERY important.
I.e., you can make arrangements with the "employer" (client) to
be paid as an independant contractor and, later, find that the
gummit thinks you were an *employee*.  This can really screw the
client (since the gummit demands your "withholding" from them
which, of course, they haven't done since you're "not" an employee
in their eyes).

As an independant contractor, you can write-off your expenses
including a portion of your residence.  If you *rent*, this can be
a big win as it is very easy to put a number on what your
residence costs (if you own your home, there are other potential
consequences if you take this deduction).

You can also "expense" quite a bit for capital purchases (most
likely, more than you'll earn!) which can effectively give you
a 15%, 20%, 30%, etc "discount" on those items.

Part-time employees *seem* to be more likely to transition to
full-time employees than "contractors".

<shrug>  I'm sure there are other issues that I've long since
taken for granted.  :-(

Good luck!
--don