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I have recently (as of 4.5 hours ago) become employed - on a contract basis. Nothing has been signed, but the verbal agreement is there.

This brings up a myriad of questions.

I am being contracted through a contractor (that means I'm subcontracted, right?). Does this mean that I have to worry about my own income taxes? What about Soc Security and those "other things" that were always witheld for me by my hourly employers?

Are most contracts paid at point of delivery, or is there a week or two lag time after delivery to point of payment?

Do most contractors just budget really really well week-to-week during jobs and between paychecks, or is there something else there I'm missing?

Is there any other information I should have? I knew about contracting, but I never thought that I would be the one doing the contract work. (silly me!) Is there some obvious things I should be aware of before reality hits hard?

Thanks!

Becky
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I am being contracted through a contractor (that means I'm subcontracted, right?). Does this mean that I have to worry about my own income taxes? What about Soc Security and those "other things" that were always witheld for me by my hourly employers?

Are most contracts paid at point of delivery, or is there a week or two lag time after delivery to point of payment?

Do most contractors just budget really really well week-to-week during jobs and between paychecks, or is there something else there I'm missing?


Hi Becky!

Currently, I, too, am working for a contract house. Technically, your employer is the contract house, which must withhold the usual taxes, such income tax, social security, medicare, etc., from your paycheck that any regular company would withhold. I have heard that one can contract directly with companies, that means NO contract house and conceivably more money for you, and in that case I don't know what would happen. I would make withholding taxes part of the deal in that case.

When one gets paid is up to the contract house. Some pay every two weeks and some pay every week after delivery of services. Either way, it's like having a part-time job, so budgeting your income is a must.

I know that in the Twin Cities area, there is little time between assignments. Talk to the contract house. You are a client as much as the company you will be working for.

Scott
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Contracting can be dangerous. About 10 years ago, one of my friends found out too late that the contract company she worked for (I think
it was Belcan or Belcon or something like that) was not withholding properly & she ended up owing $20K to Uncle Sam - they had to file bankruptcy - this was before the "kinder, gentler IRS". They have
only recently come out of the bankruptcy.

I worked contract for specgroup (now tmp.com) last year & part of this year with no tax/SS issues. It all depends on the contracting agency.

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