Starting contract work, what's required?

My husband is employed full time right now, but plans to get a machine and do contract work on the side. To do that, does he need any particular certifications? And will he need to register a business for himself to accept and complete the contracts? It will just be him doing the work, though I will be the one keeping track of the financial side of it. Most likely he will be staying with his employer for a while, possibly dropping down to part time if he wants to focus more on contact work. Just wondering what needs to get done before he starts so everything will be in order come tax time.

It could be as simple as getting a business license from the city or county (whatever applies) and filing a 1040 schedule C at the end of the year. If he goes the sole proprietor route he can use his SS# and doesn't need an employer I.D. if he doesn't have employees. Once he starts making money he will have to pay quarterly estimated taxes. If he doesn't use his full name in the business name he will have to file a fictitious business name form and run an ad announcing it in a newspaper (those are the rules in most localities).

Depending on what work he takes on will dictate needing various certifications.

Dualkit said:

he will have to file a fictitious business name form and run an ad announcing it in a newspaper (those are the rules in most localities).

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New one to me.

He might not even need a business license to be a sole proprietor. In Texas, you don't need a license unless your business is in certain areas: liquor, oil, etc.

You might check into insurance. If something bad happens on your property and it's business related, your home owners policy might not cover it.

The first thing you should consider is moving out of California.

Dualkit said:

If he doesn't use his full name in the business name he will have to file a fictitious business name form and run an ad announcing it in a newspaper (those are the rules in most localities).

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CosmosK said:

New one to me.

He might not even need a business license to be a sole proprietor. In Texas, you don't need a license unless your business is in certain areas: liquor, oil, etc.

You might check into insurance. If something bad happens on your property and it's business related, your home owners policy might not cover it.

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Look at the location "California." That is where I escaped from. Pretty sure Texas is the opposite of California when it comes to business regulations. This is from an official County of Los Angeles website:

***State law requires that within 30 days of filing, the registrant must publish a statement in a newspaper of general circulation in the county in which the principal place of business is located once a week for four successive weeks. (B&P Code 17917)

P.S. I said "most localities" on the newspaper ad because I always had to do it when I was in Cali, after looking it up, it appears to now or maybe always has been a state law.

Larry Dickman said:

The first thing you should consider is moving out of California.

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I thought you loved it there? My dad lived somewhat down your way close to Tom's Farms in South Corona. Pretty fricken nuts how congested that area got in no time flat. That I-15 North commute in the morning was a nightmare.
My dad worked at Northrup somewhere around Whittier had to hit the freeway by 4:30 to "beat the traffic" and get to work by 6:00 a.m. That was the early 90's, probably a lot worse now.

"Contract" work is just a fancy way of saying job shop. You don't make your own product, you make stuff for other companies, people, etc.

Nothing prevent someone from buying a machine and making parts with it.

You may want to put a legal entity between the company and your personal stuff. ie: LLC, corp
in case something goes sour and you get sued.

Depending on what he plans on making you might be able to get away with a small hobby-type business in a residential neighborhood for a while. Otherwise you may need to look for someplace that is zoned properly.

Bree863 said:

My husband is employed full time right now, but plans to get a machine and do contract work on the side. To do that, does he need any particular certifications? And will he need to register a business for himself to accept and complete the contracts? It will just be him doing the work, though I will be the one keeping track of the financial side of it. Most likely he will be staying with his employer for a while, possibly dropping down to part time if he wants to focus more on contact work. Just wondering what needs to get done before he starts so everything will be in order come tax time.

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First needs to know how to do the job,which is not easy
there is a pool a very old talented machinists, your worries
of taxes is nothing ,getting work ,getting paid is something else, machine shop, is for the ones like me old, that never went to college, its not the 30s or 40s that you could make a gadget and have good run at it, now to build your own product takes
a fortune in a saturated market.

Dualkit said:

I thought you loved it there? My dad lived somewhat down your way close to Tom's Farms in South Corona. Pretty fricken nuts how congested that area got in no time flat. That I-15 North commute in the morning was a nightmare.
My dad worked at Northrup somewhere around Whittier had to hit the freeway by 4:30 to "beat the traffic" and get to work by 6:00 a.m. That was the early 90's, probably a lot worse now.

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I have a lot of land up in the hills where I built a house. If it wasn't for that, I'd be out of here faster than shit though a goose. The business climate is intolerable, and with the new jack ass we have for a governor, I only see it getting worse.


I didn't really see this as a legitimate thread. Judging by the response from the OP, I think I'm right. Maybe I'll have my wife look into it.

As long as one of you has a "real" job isn't the toys in the garage just for personal tinkering? Not sure but how could coverage be denied due to a "hobby" that was involving tools?

Most places only want to write checks to a business, so at least get a DBA and a bank account under the business name so you can get paid.

State local rules and regulations are different everywhere.
For example if you own just a desk and a computer it may be subject to local personal property tax.
You need a local CPA or Lawyer to make sure you cross all the T's and dot the I's. Unless others live next door to you with a similar setup I'd be wary of internet advice.
You don't have to hire them but a $100-200 consultation can save you big money down the road.
The Feds are not so bad if you bend the rules a bit, here the state is brutal and unforgiving.
One not filed piece of paper can be a $1000 fine.
Bob

Dualkit said:

***State law requires that within 30 days of filing, the registrant must publish a statement in a newspaper of general circulation in the county in which the principal place of business is located once a week for four successive weeks. (B&P Code 17917)

P.S. I said "most localities" on the newspaper ad because I always had to do it when I was in Cali, after looking it up, it appears to now or maybe always has been a state law.

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I could be out of date but that was for a fictitious name. If your business was John Brown Machining (and you were John Brown) then you didn't have to do that.

Fictitious name publishing has been a state law since at least 1974 that I know of. But you can do it in the smallest local throwaway shopping rag, they don't care.

CarbideBob said:

State local rules and regulations are different everywhere.
For example if you own just a desk and a computer it may be subject to local personal property tax.

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You are so right about things being so different from state to state. Here in Virginia I pay personal property tax on my office equipment,which consists of a desk and a PC, something I did not have to do in California. The difference in gun, hunting and traffic laws is also nuts. Here since I am in a rural area I can shoot right off my back porch and kill anything that I consider a pest (other than a human). In California you can't even legally kill a rattlesnake curled up on your front porch. Just when you think things are lax here 80 mph in a 70 mph zone is reckless driving and you can get hauled to jail. In California 80 mph won't even get you pulled over in many areas. We also have a lot of other goofy things considered reckless driving here, like not moving over a lane when an emergency vehicle is parked by the side of a road. Two infractions on that and you can be put in jail and that one is rarely posted.

Moral of the story, contact your local authorities for regulations in your area.

After years of slaving away for somebody else, I decided to do this. I opened my business in Nevada. IMHO, the best way to do this is through an LLC. There are more benefits and protections from this.
It’s not too hard. Well at least it wasn’t for myself. I just went on the secretary of states website and found a suitable name that wasn’t taken. I called my lawyer buddy and threw him a few bucks. Everything was set-up within a few weeks. From having everything generated to a rigger and a tech plopping my machine on the floor.
After that I made some cold calls, networked, and dropped off a bunch of business cards and notepads. After that, I dealt with haggling, and my spindles started humming.
A decent lawyer can do all the dumb shit for you, and it doesn’t even cost as much as you’d think. Like dual said... once you start making money, you will have to pay estimated taxes quarterly. Also, keep in mind that you’ll have to turn a decent profit within the first few years or the IRS will give you trouble and try and accuse you of running a hobby as a business. Also, don’t overlook section 179. It’ll save you a decent chunk of change. And like carbide bob said... a lawyer will dot all the I’s and cross all the T’s. For me, a lawyer was an added expense, but in the end... it will save you money.

Keep records.
Get a Business account at the bank, and keep every check and receipt.
Pay for everything up front. Tools, materials, machinery, accessories. This way nothing haunts you if you have lean month.
You'd be surprised what a good accountant can go when you have receipts.