[Hidden-tech] Question Regarding Consulting

[ussailis at shaysnet.com]

Some of the consulting / employee rules came from the "peace dividend"
brought by Pres Clinton (I believe) in the early 90s. 

What happened was the call went out for defense contractors to become
smaller as the weapon systems were not needed. This caused the contractors
to lay off many workers, and then "discover" that they couldn't fulfill
their already in-house contracts they had with DoD.

So they hired many of the layoffs back as consultants, but never told them
about the cost of being a consultant. That consultants had to pay employer
taxes, insurance, unemployment, and benefits to themselves. 

All this isn't reported on a 1099.

After a year or so, Uncle Sam decided that any "consultant" employed by
defense contractors should be able to prove that they have multiple
contracts with several businesses. The call also went out that if the
consultant should operate as a Chapter S corporation, all was well.

Since that time it has been difficult to get work from the major defense
contractors, or form DoD, or many Gov't agencies unless one is a Chapter S
corp, or can prove the many contracts. So how does a person get their first
contract then? 

In MA a chapter S corp has to pay $465 + $109 / year for the privilege, pay
employment taxes, etc., & file bunches forms.

All this costs & takes time away from real work.


Jim Ussailis
National Wireless. Inc. 

PS Yes, I believe an LLC also satisfies these soft rules. I do have a
difficult time seeing the difference between Inc and LLC, however.  

Original email:
-----------------
From: Christine Dutton cgdutton7 at gmail.com
Date: Mon, 20 Nov 2017 09:31:40 -0500
To: dlesser at ptraining.com, cgdutton7 at gmail.com,
hidden-discuss at lists.hidden-tech.net
Subject: Re: [Hidden-tech] Question Regarding Consulting


These are exactly some of the things I've been thinking. We will finalize
our decision after seeking legal advisement. Thank you!

On Mon, Nov 20, 2017 at 9:29 AM, Don Lesser <dlesser at ptraining.com> wrote:

> I have always found the language of “not closely supervised” as a
standard
> for contractors to be stupid. If I hire a contractor to rebuild a bathroom
> or teach a particular class or to program a specific module, I have
defined
> the job. I don’t want a new living room, a different class, or a phone
app
> instead of an SQL database. So I am telling the contractor what to do
which
> seems in conflict with the rules. I don’t tell a carpenter which hammer
to
> use or how to install a stud. I do tell a trainer what materials to use,
> which examples to use, and my standards for professional behavior. I do
> tell a consultant to use the development platform the client uses since no
> client will, for example, allow us to use MS Access instead of Crystal
> Reports, which they use for all other reporting.
>
>
>
> That said, informally, if you hire a contractor, train them in your
> materials, and then let them teach it, it seems you have enough of a
> hands-off relationship for a 1099. Most of the contracting agencies I know
> of, however, have gone to a W2 without benefits because it protects them.
> The exception is if the contractor has a corporation. (Not sure about
LLCs,
> partnerships, etc.) In this case, the agencies are OK paying the
> corporation and letting the contractor take care of taxes.
>
>
>
> Another potential issue is that all contractors are required to have
> Workman’s Comp insurance for themselves. As a corporation, I have been
> required to pay for Workman’s Comp insurance for all my contractors
just as
> though they were employees. Only one contractor I know of actually has WC
> insurance. I am not addressing telling untruths to your insurance agency.
> That is between you and them.
>
>
>
> Decide what will let you sleep better and check with your accountant to be
> sure.
>
>
>
> Don Lesser
>
> Pioneer Training, Inc.
>
> 139B Damon Road, Ste 8
>
<https://maps.google.com/?q=139B+Damon+Road,+Ste+8+Northampton,+MA+01060+(41
3&entry=gmail&source=g>
>
> Northampton, MA 01060
>
<https://maps.google.com/?q=139B+Damon+Road,+Ste+8+Northampton,+MA+01060+(41
3&entry=gmail&source=g>
>
> (413) 387-1040
>
> dlesser at ptraining.com
>
> www.ptraining.com
>
>
>
> *From:* hidden-discuss-bounces at lists.hidden-tech.net [mailto:
> hidden-discuss-bounces at lists.hidden-tech.net] *On Behalf Of *Christine
> Dutton
> *Sent:* Monday, November 20, 2017 7:50 AM
> *To:* Christine Dutton <cgdutton7 at gmail.com>; Hidden-Tech Listserv <
> hidden-discuss at lists.hidden-tech.net>
> *Subject:* [Hidden-tech] Question Regarding Consulting
>
>
>
> Hi Hidden Tech Folks!
>
> I have a question regarding consulting status with organizations. I have a
> client who is forming their business with a focus on delivering diversity
> workshops. The client would like to work with consultants, but the
> consultants will be required to train on workshop delivery. Beyond the
> training, the trainers will not be closely supervised. Please let me know
> if you have worked as a consultant for an organization with this type of
> arrangement. It would be great if you could share the name of the
> organization you were working with. My goal is to ensure that the
> consultancy arrangement is designed within legal requirements.
>
> Thank you!
>
> Christine
>


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