Moonlighting/Side Business Questions

[MissPeach]

I am about to take on some side work a few hours per week in software engineering for a start up. I also have a day job but I can do this work on my weekends without impacting my main job. I'm trying to make sure I'm smarter about it this time than I was in the past when I consulted full-time. Any BTDT advice?

Here are a few things I've been thinking about:
1. Need to apply for a tax ID number as I don't want unnecessary people having me SSN

2. Need to see if I can tax defer any of this.

Can this be done through something like a SEP if I already contribute to a 401K? I already make enough I can't qualify for an IRA (Roth or Traditional). It wouldn't make sense to incorporate into a S Corp and take advantage of the tax breaks for a few hours per week. With a schedule C I could write off some of the income through home office deduction and equipment expenses (plan to purchase a new laptop).

3. Liability - Is there much exposure for making a few dashboards and such? Do I need to look into an umbrella policy?

[hwstar]

Get a TIN. It opens doors for resale permits and business bank accounts.

Incorporate if there is more than a few thousand dollars involved and you have significant assets. Have second thoughts on any business venture which could result in litigation if you do not incorporate.

I was able to defer 19.9% of gross income to a SEP while still contributing to a 401k from 2005-2009. I don't know if the rules have changed. Check with an accountant.

An umbrella policy will not protect you from business litigation. You need errors and omissions insurance and/or commercial liability insurance. Additionally, incorporating may not protect
you unless you have a commercial/E&O business policy. Something to keep in mind.

I did not take the home office deduction. I felt it might lead to an audit. Regarding the laptop: Any business purchases must be fully justifiable  as a legitimate business need in the eyes of the IRS.