Author Topic: Might start consulting/side gig- What do I need to think about?  (Read 4418 times)

Carini

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So I've contemplated doing this for several years, but might finally take a shot at it. I've been working with students who have disabilities in a college setting for the last 10 years.  Students working with an "academic coach" or educational consultant has become a huge business.  In my current role, I actually end up communicating with some of the coaches that are assisting the students. I started thinking, "Hey, I could totally be doing what this person is doing on the side, and making some damn good extra cash."  Now don't get me wrong, it's a lot of work, and I would start really small. Probably just with a couple of students.

These people do everything from- helping look for colleges with good disability programs, helping with disability support at the high school (helping as an advocate), helping with study skills/time management, etc....   In a lot of cases at the college level, parents are looking for someone to help hold their child accountable. A ton of this work happens via phone or skype. I would not have my own office, but would probably meet families at their homes from time to time. 

I would obviously not be able to work outside of my position with students that attend the university that I work for, but I could work with students from high schools and other colleges in the area. 

When I was talking to my accountant about this and saying I would set up an LLC, his advice was "don't even worry about that yet." He said register the business name with the state like you need to, find a few students and see how it goes before you pay the money and go to the trouble of setting up an LLC. He said that based on what I've described, he doesn't see liability issues if I'm working with a few families. I'm not sure if that's good advice or not. 

So just based on what I've described, what other things do I need to be thinking about if I were to start up this side business?  Thanks in advance.

ivyhedge

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Re: Might start consulting/side gig- What do I need to think about?
« Reply #1 on: June 01, 2015, 08:30:30 AM »
I will not pass judgement on what you choose to do for side income.


But here are two pieces of advice: 1) report every penny (never run afoul of the IRS) and 2) insure yourself (many feel that side gigs that run the gamut from x to y do not require it: oh, they do - especially folks visit your home, or if you are granted access to others' homes). Sadly, you might find the need to reconsider your plans because of tax, and insurance, bites as a function of profit margin.

Carini

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Re: Might start consulting/side gig- What do I need to think about?
« Reply #2 on: June 01, 2015, 08:38:53 AM »
That sounds like good advice.  I certainly intended on reporting every penny; that is for damn sure. You might be right about the costs not being worth it. I'll have to check into it.

 Just to be clear, we're talking mainly about students with executive functioning difficulties (staying on task, planning long assignments, study skills, time management)....   Your line about not passing judgment sort of sounded like passing judgment, so I felt the need to clarify  :) 

And in my experience, these are typically affluent families hiring someone to do a lot of the things they could be doing for their kid's education. But if someone has the money and is willing to pay me to help, I think I should consider it.  Thanks again for the tips!!

Sparafusile

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Re: Might start consulting/side gig- What do I need to think about?
« Reply #3 on: June 01, 2015, 08:45:03 AM »
Your accountant telling you not to form an LLC seems ludicrous. Setting one up is usually really easy and requires very little expense. It will vary by state, but when I set mine up I think it was $85, I could do it all online, and I got a response the next day. If one of the students you are working with gets hurt under you care you would be personally responsible unless you were working under an LLC. That's the first level of protection I would almost insist on - it separates you from your LLC.

The second level of protection I would suggest is an umbrella liability insurance policy. Again, these are usually really cheap. What this does is protect your company from lawsuit. If you just had an LLC and you got sued your business might have to declare bankruptcy. If you have liability insurance you might be able to keep your business. If you are going to be personally responsible for these kids at any time I would also insist on getting this.

Finally, my last bit of advice is to get in contact with your local SCORE group. This is a free organization funded by the government that is specifically designed for people like you to ask all the questions you need in a small group or one-on-one setting. The best part is it's free, it's free, it's FREE! Do this right now.

Carini

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Re: Might start consulting/side gig- What do I need to think about?
« Reply #4 on: June 01, 2015, 08:49:12 AM »
Your accountant telling you not to form an LLC seems ludicrous. Setting one up is usually really easy and requires very little expense. It will vary by state, but when I set mine up I think it was $85, I could do it all online, and I got a response the next day. If one of the students you are working with gets hurt under you care you would be personally responsible unless you were working under an LLC. That's the first level of protection I would almost insist on - it separates you from your LLC.

The second level of protection I would suggest is an umbrella liability insurance policy. Again, these are usually really cheap. What this does is protect your company from lawsuit. If you just had an LLC and you got sued your business might have to declare bankruptcy. If you have liability insurance you might be able to keep your business. If you are going to be personally responsible for these kids at any time I would also insist on getting this.

Finally, my last bit of advice is to get in contact with your local SCORE group. This is a free organization funded by the government that is specifically designed for people like you to ask all the questions you need in a small group or one-on-one setting. The best part is it's free, it's free, it's FREE! Do this right now.

Wow. This sounds like a lot of great information.  Much, much appreciated!!

ivyhedge

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Re: Might start consulting/side gig- What do I need to think about?
« Reply #5 on: June 01, 2015, 08:53:25 AM »

 Just to be clear, we're talking mainly about students with executive functioning difficulties (staying on task, planning long assignments, study skills, time management)....   Your line about not passing judgment sort of sounded like passing judgment, so I felt the need to clarify  :) 


My intended to broadly "accept" what folks want to do, without judgement of how they arrived at the choice for their supplemental income: from tutoring to executive high end job consulting to laboratory work.

NorCal

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Re: Might start consulting/side gig- What do I need to think about?
« Reply #6 on: June 01, 2015, 09:55:13 AM »
The expense of maintaining an LLC varies dramatically by state.  In CA, you're talking about $800/yr in minimum taxes to maintain and LLC with a couple hundred more in expenses to set it up.  Other states are close to zero.  Overall, it's a hassle.

I'm assuming you already have a few relationships to start the business with.

While it depends on your risk tolerance, I agree with your accountant.  Get a few clients that you know to start with.  Form the LLC when you're ready to expand and truly take it full time.

Having insurance is smart.

Krolik

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Re: Might start consulting/side gig- What do I need to think about?
« Reply #7 on: June 01, 2015, 12:14:38 PM »
I would say business insurance is a must even if you think it is very unlikely you might get sued.

We run a tiny side business and got hit with 15MM lawsuit. The situation was absurd but it didn't matter. If we didn't have business insurance we would not survive. The plaintiff  (and her lawyer) was a bottom feeding piece of s##!  It was a very scary situation. Good attorneys are expensive and you don't want to be stuck with 150K invoice.

Carini

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Re: Might start consulting/side gig- What do I need to think about?
« Reply #8 on: June 29, 2015, 12:03:23 PM »
I would say business insurance is a must even if you think it is very unlikely you might get sued.

We run a tiny side business and got hit with 15MM lawsuit. The situation was absurd but it didn't matter. If we didn't have business insurance we would not survive. The plaintiff  (and her lawyer) was a bottom feeding piece of s##!  It was a very scary situation. Good attorneys are expensive and you don't want to be stuck with 150K invoice.

Just for the hell of it, what do you pay for business insurance for your tiny business?  Just curious. 

Carini

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Re: Might start consulting/side gig- What do I need to think about?
« Reply #9 on: June 29, 2015, 12:04:37 PM »
Any creative mustachians want to throw out a name for the company they think is good based on what I've described? 

regulator

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Re: Might start consulting/side gig- What do I need to think about?
« Reply #10 on: June 29, 2015, 12:09:51 PM »
DW is in a similar line of work and does not have an LLC, just a big liability policy.  I would see if you can find a high limits (millions) liability policy that would cover you for E&O as well as for general claims (slip and fall).  Set up a separate business checking account and keep all your dealings in there.  You will probably need a business license and if you are working out of your house there may be zoning issues.  If you choose not to set up an LLC, you will need to register a DBA with your state.

Krolik

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Re: Might start consulting/side gig- What do I need to think about?
« Reply #11 on: June 29, 2015, 12:10:40 PM »
I would say business insurance is a must even if you think it is very unlikely you might get sued.

We run a tiny side business and got hit with 15MM lawsuit. The situation was absurd but it didn't matter. If we didn't have business insurance we would not survive. The plaintiff  (and her lawyer) was a bottom feeding piece of s##!  It was a very scary situation. Good attorneys are expensive and you don't want to be stuck with 150K invoice.

Just for the hell of it, what do you pay for business insurance for your tiny business?  Just curious.

For us it is $650 per year. It is for online business (internet store).

Axecleaver

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Re: Might start consulting/side gig- What do I need to think about?
« Reply #12 on: June 29, 2015, 12:48:28 PM »
I pay $2200/year for $1m professional liability/errors and omissions, and a general liability policy. The prices vary quite a bit between states. I'm in NY, where everything seems to cost more. My policies are contractually required with specific limits. You don't need anything like this, yet.  An LLC will protect you from liability as long as you don't "pierce the veil" by doing something prohibited, like employing people without carrying worker's compensation insurance. If you set up an LLC, and you're sued, you just cut the LLC loose and let it burn.

I think your accountant's advice was to see if the business would fly first, before you threw a bunch of money at something before it was generating revenue.