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Shell Companies for Contractors?

Posted by Cliff on from the resources-for-freelancers dept.

dubl-u asks: "What do my fellow freelancers feel about the various shell companies out there? I've got a chunk of work coming up at a place with an especially persnickety contracts department, and I'll probably need to go through a third-party shell company. I used one a couple of years back and they were ok, but there are a lot of them out there, and I'd love to hear about real-world experiences before I sign up. For those unfamiliar with this part of the business, it goes like this: I find my own work; the shell company hires me as an 'employee' and handles my billing and tax withholding for me. Some also 'provide' things like health insurance and 401k plans, although I have to pay for it. You can think of it as outsourcing a lot of the paperwork of being a freelancer. Some outfits, large companies especially, demand this sort of thing."

3 of 42 comments (clear)

  1. WBE/MBE/DBE status? by gregwbrooks · · Score: 4, Interesting
    Just curious: Do any of these companies offer the added benefit of being MBE/WBE/DBE certified? I do a lot of public-sector work, where there are typically set-asides for disadvantaged, minority-owned or woman-owned busiensses.

    If they could offer inclusion into one of those categories, it would be a pretty big advantage in bidding on some projects.

    --


    "It was a summer's tale: Just a boy, his Linux, and a head full of dreams..."
  2. Re:Just create your own S-Corp by digerata · · Score: 4, Interesting
    I almost fell into the scam of those companies that will 'do all of the paperwork for you' for between 300-500 dollars depending on where you are at. Then I looked around...

    In MI you can create an LLC for a grand total of 60 bucks. 10 dollars for the county DBA (doing business as) and 50 bucks to register the paperwork with state. You don't even need the DBA later on, you could just skip that.

    Piece of pie.

    --

    1;
  3. Re:Spent most of my carrerr doing this by count3r · · Score: 5, Interesting
    If you feel you will be getting more of these, put together a LLC if you have one other friend also contracting. Two employee make for a group health plan under California law.

    Actually, many large companies (including mine) are even more restrictive-- not only do they require a contractor to work for a shell company, the shell company needs to be on a (usually short) list of approved vendors.

    Forming your own shell doesn't solve this...