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Friends and family always ask for computer help. Most of my friends from church insist on blessing me with a few bills despite my objection. However, I have an in with a real estate company and am considering put an ad out there for some extra money on the side.

What do I have to consider from a tax/legality standpoint if I am doing some independant break/fix and consulting work on the side?

Obviously I don’t expect hardcore financial advise but some basic instruction from those of you that may do the same thing.

Thanks in advance!

14 Spice ups
2

Set up a basic LLC, that way if something goes horribly wrong your personal assets can’t be targeted in a lawsuit.

Set clear expectations up front with costs and services, even for something basic take the time to write a quick quote and scope of work.

Don’t be afraid to fire bad clients to spend more time on good clients.

13 Spice ups
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if you start doing it for income, that you CANNOT do it as a favour for anyone else

15 Spice ups
4
  • Make sure you protect yourself and legally become a LLP or something similar.
  • You’ll also need some insurance to protect yourself/side company in case something ever happens.
  • Get a lawyer to write up a contract agreement for you and your clients to sign.
  • Get some type of financial software (Quickbooks etc)
  • Don’t under price your services. You’ll need set aside a good chuck for both company and personal taxes (~%50) depending where you are doing business.
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5

I respectfully disagree with this. I choose who pays and who does not, and I charge different amounts, too. Those who are retired and obviously living on a fixed income get a significant discount, family and close friends (by my definition) get free help, and businesses and regular people pay my full rate. Of course, I work part time for an organization, so my contracting on the side is just fluff to help pay for fun.

3 Spice ups
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Your situation sounds just like what I am going for. Can you elaborate on your situation? How do you handle tax reporting and so on?

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well if its just a cash transaction who is going to know >.>

I know people that do this just for cash and don’t make any mention of it to any tax authority, pretty sure if its under a certain amount per year its not something you have to get super specific with. But if you do more than a couple thousand a year it’s probably gonna be a good idea to set up an LLC and get insurance and whatnot. For the insurance talk to whoever you get your other insurance through and they will walk you through it.

Definitely don’t undersell yourself man, but price yourself on your clients not “your” rate. If you are fixing a $10,000 a month problem with their datacenter $2,000 is an amazing deal for the business! while charging $40+ an hour to do break fix for 20 hours a week might be expensive to the company for the problems you solve, or you might be so underpriced for what you end up doing they are jaded for life against people that charge what they are worth.

tldr; charge per the job, not by the hour, you get more money and everyone is happier that way

1 Spice up
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woah man, you can always help people out. Its not like getting paid and relying on that pay for day-to-day expenses suddenly has to make you soulless.

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The key here is be fair and avoid situations in which you can be perceived as cheating people or being discriminatory.

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I think the number is $600 (don’t know if this is state mandate or national/IRS). Anything after that, the tax man want’s his share

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Getting paid by church people is exceptionally rare… You should be charging them your regular rates (if not more).

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I am sorry you feel that way. I have never had a problem in ten years. Most people I deal with at church are shoving money at me.

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Im in the same boat. too many people asking me to fix things for free so i made business cards with my contact info. i just want some beer or gas money. maybe some project money and cert materials.

i may get a domain name too for pricing info and a downloadable remote tool of some kind.

LLC seems a good idea but for now im only doing friends and family. and i doubt ill make enough to worry about taxes anytime soon.

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I agree. I don’t want to go through the hassle of lawyers and registration and insurance, only to make a couple hundred bucks. But at the same token, where is that line when it becomes a tax liability? I guess technically you need to report it all.

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I wouldn’t necessarily bother with an LLC if it’s truly on the side.
Get some business cards and a lawyer to draft a solid service contract.
You might look into some kind of liability insurance though, cause people are litigious.

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I used to work for a large church and was often propositioned by members to assist with issues at home.
In nearly every case I was paid 1.5-2x my asking rate. IME, some religious types are the most generous.

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Well, technically, it’s the law. In this case, more often observed in the breach of it.

Legally, you must report all income. Any form of payment is reportable (I’ll give you a case of beer if you do this). Even barter is taxable (You must declared the imputed value of the services rendered).

What you report is between you and your conscience. (And, perhaps, your tax attorney.)

3 Spice ups
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In IN it’s basically when you start dealing with sales tax.

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I didn’t mean that to sound shady, just wasn’t sure if there was a line that dictates reportable vs. not reportable. The whole hobby versus business is where I got side tracked. Especially when I do things for church for no pay (voluntarily), or for a friend, who shoves money in my hand because they are cool like that, and then in turn refers me to a co-worker who I don’t know that I charge for my service.

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The reason I did an LLC when I was doing this kind of work was to protect myself from the few bad clients I encountered. I didn’t pay a lawyer as my needs were basic, I picked up the form pack at staples and submitted it. Requirements may vary by State.

Most clients were great, but every once in a while I’d encounter the person who was not happy about the situation and service and would try and bully with threats of lawsuits and ruining me. Once they calmed down I let them know they could pursue that avenue, but if they won they wouldn’t ruin me, they would get a few hundred dollars in my business account and possibly the business name and domain. I never ended up in court or sued.

Report all income, it is better to be above board. Doesn’t matter if you are LLC, or just taking cash.

3 Spice ups