IT related side work and charging customers

ampersat · 08-25-2005, 11:06 AM

I'm in the IT industry and I've been approached on several occasions to do work for friends and aquaintances, anything from web sites to networking to general PC/server stuff. Generally, I'll decline the work or I will offer to trade my services for something they have as a favor.

My question is: can I charge people cash for this work and if so, how much money can I make at this before I would need to set myself up as a business?

Thumper · 08-25-2005, 11:48 AM

Quote:

My question is: can I charge people cash for this work and if so, how much money can I make at this before I would need to set myself up as a business?

If you are taking payment for performing services, you ARE a business.

The only issue now is how much can you make illegally without getting caught; i.e., without establishing a formal proprietorship that is registered with the state and feds, pays taxes, etc.

There is no provision in this wonderful country for taking money, products or services (in lieu of money) without properly accounting for it.

Mark Vickers · 08-25-2005, 01:01 PM

I too am in the IT industry. I've done it both ways. If there is a formal agreement and any money involved, I'll report it.

If its just a little project for a friend which usually involves a swap of goods or services, then it stays just that... Friends helping friends.

That said, I'm doing fewer and fewer of these little side projects as I just don't want to make the time for them any more. There are more fun things to do like fishing.

Silver Hilton · 08-25-2005, 01:40 PM

I don't see much point in setting yourself up as a business, unless and until you want to start paying taxes against the income, and matching expenses against the income in order to reduce taxable income. All you accomplish by registering for a business license is to give visibility on your activities to a wide variety of government and private entities.

Setting up as a corporation, a separate endeavor entirely, can accomplish some things in terms of limiting liability for business acts as far as securing personal assets against a lawsuit against your activities as a business. However, there is a lot of overhead associated with maintaining a corporate veil, and it's probably way out of proportion to the income that you receive from side jobs.

You are already liable for taxes on the income or trade items you receive for these side jobs. Registering as a business will merely make you easier for a tax authority to come a-looking.

A minor benefit of having a business license is that some organizations will give you a better price if you do have a license, or won't do business with you if you don't have a licence (Graingers being a notable example). I haven't found a lot of benefit to this.

StickFish · 08-25-2005, 05:03 PM

Call me we can chat - but the definitition of income from section 61 of the Internal Revenue Code is = income from whatever source derived including compensation for services unless specifically excluded. So that is paraphrased a bit - so lets say you charge someone a dollar to install Ad Aware - that is $1 of income in terms of your responsibility for federal income tax purposes. I won't get into what you can write off because that is just as vague as the definition of income, just the other way.

I'm not code and verse with the State of Oregon Revenue requirements, but they key off the federal definitions. Next since you live in a Metro Service District - guess what you owe Metro some as well. Course this is all assuming you want to be on the up and up - I'd also get some insurance.

One piece of advice I will give you is if you have a 9 to 5 job and you start to do this it will eat into your kitchen passes BIG and if you wife doesn't understand this it can be painful. I used to find myself coming home from work just to go back to work. When the kids came along - enough was enough. Your customers will call you and if they are friends you will bend over backwards because you will feel a little extra obligation and that can cause some big interference and 10pm on Weds. night.

What I do now is I refer them to other friends of mine in the business and we are all happier now.

Still feel free to call or you know how to run the tap, just pour me one and we can talk.

Gus Orviston · 08-25-2005, 05:31 PM

Bleck... been there done all of that. Been doing puters sine '84, use to handbuild XT/AT motherboards, soldered on the kitchen table, build up systems and sell them. Also, did side jobs getting through college, but I got really tired of that type of work.. it wasn't worth it, unless you get nitty gritty on hours worked.

I kept running into scenarios like this.. I would go install and OS, set up a computer, extra HDD, set up mail accounts and so on. Then a week later I would get a call.. "hey the computer is dead, you did something." What... "Yeah, the computer is dead and it is something you did". Ok so I driver over and look it over... one of their kids deleted the system director, or the power strip in back is not on. It wasn't worth the hassle.

Done right, which I was not prepared to do, you should charge..charge and charge. Doing favors gets you into more trouble, because you now become teach, not just IT guy.

gus

ampersat · 08-25-2005, 05:44 PM

Stickfish, I was especially hoping you wouldn't see this post. :grin:

This is a case where someone my wife is working for wants to set up a website. I've done it before for friends and it's been fun. These days though I have other priorities and coding sites ain't one of them (considering it has become my full time job more or less).

Thanks for the info.

StickFish · 08-25-2005, 06:21 PM

Just remember they don't pay me enough to pay attention

Otolith · 08-26-2005, 08:15 AM

Forward her to me man. I have an LLC set up already to do this kind of crap on the side. Plus I'm probably a better web developer than you :tongue:

skrimmy · 08-26-2005, 08:34 AM

Quote:

Forward her to me man. I have an LLC set up already to do this kind of crap on the side. Plus I'm probably a better web developer than you :tongue:

Ah, come on Bill! Tell us and Amp how you REALLY feel! :grin:

sinker · 08-26-2005, 08:21 PM

My brother went down this path and it turned into a real pain. He'd build a computer for someone and 2 years later they'd call him up because a power supply or something would go out and they'd expected it to be covered under warranty, and that was a free job.

Seems like whenever he was going to charge it turned into a major headache just getting the systems setup.

And then there's the couple web pages he'd setup, they'd get into it and screw it up and he'd have to fix it so then 2 weeks later it started all over again.

Chromaflage · 08-26-2005, 08:40 PM

Amp - Let me know if you could use an assistant. My son will be starting his Senior year and he's looking for an internship to complete his capstone project for school. He's been going through the Cisco networking IT program at Gresham/Barlow's Center for Advanced Learning. In fact, if anyone reads this and could provide a possible internship opportunity for my son, please let me know.

Thanks,

CrF

JustCallMeDave · 08-27-2005, 10:56 PM

Amp,

Thank them for considering you, but let them know that you aren't interested. Trust me on this one, you don't wanna ever get involved there.

lost_sailor · 08-28-2005, 06:49 AM

Friends, no charge. People running a business, friends included - I'd be thinking $50-100 an hour. 50% discount for the friends perhaps. Barter is supreme.

I could use some of that work, except ... it's still SUMMER.