Once you face the choice in your business of either doing what your core business is or doing bookkeeping, I think you're nuts not to consider a contract bookkeeping service. Of course, starting off your business by doing your own bookkeeping is a good learning experience, but after a while, it just interferes with your core business. And as for tax time, most bookkeepers are not tax experts - find an Enrolled Agent or a CPA that does taxes.
... View more
It depends a great deal on whether or not your former employer is willing to substantially increase your hourly rate. First, you will be responsible for the entire 15.3% Social Security and Medicare tax on your net income. Yes, your employer will no longer have to pay his/her half of the FICA tax once you are not an employee, but this may be a hurdle for the employer. Second, what about benefits? Your employer probably spends a lot on benefits for you: his/her part of the health insurance premiums, 401(k) contributions (if any), HSA contributions (if any), life insurance, and so on. You need to get a realistic tally of all employer-supplied benefits, and decide if you can do without them or will have to buy them on the open market. Third, what about cash flow? If you have to take time off because you are sick, you can't bill the "employer" for that time. Can you quickly build up a reserve to cover this? Many employees think that contractors charge exorbitant rates - but the reasons above are why they have to.
... View more