Since I work 1 week on 1 week off wrenching I'm looking at getting some small side jobs on my time off. I'm looking to do it legitimately (ie no cash under the table). So aside from registering a company, what will I need to do? Insurance seems like a smart idea. What about WCB? Will I need to pay into that as well even though I plan on being the only employee? I'll likely be based out of Alberta but may try and pick up some work out of the province as well.
Things are probably different in Canada. Here, you do not need work comp for yourself if you are the owner. However, some companies require you to carry it to work on their gear. You'll need sufficient liability insurance to cover the equipment you are working on, as well as your equipment. If you are fixing bicycles, you might not need much. If you are fixing $.5 million excavators, you need a ton. Some companies will have insurance requirements you have to meet to work on their gear. $2 million is not uncommon. Here in the US, if you want to do A/C work for hire, you now need to be EPA 609 certified. You need to know the tax laws regarding collecting sales tax for parts or service sold. In my state, I collect sales tax on parts, but not labor. If it's agricultural, there is no tax on parts. Keep track of all expenses and mileage. I recommend using an accountant if you have any doubts about taxes.
If I could go back in time to where you are, Ide only do cash work! With the headaches of taxes and insurance, some days it doesn't seem worth it. I wish I had a lot more cash customers than I do now that's for sure.
Back in 'The Day' prior to all the electronic crap that keeps so many busy many of us old guys worked out of our own pickups and service trucks only working in the shops to pay insurance or get some form of benefits besides payroll. I did, I worked at a garage for a lease company weeknights, early days and weekends was spent at a local set of quarries and concrete plants, that bridged out to having my own little shop at home where in all aspects I tried to kill myself working every odd hour I could be awake making marginal incomes from all three while paying for tooling, trucks, minor mishaps to my own body. Then I went further nuts, owned my own 79Kw K100C with a 8v92T, had a driver and co-owner on it most time, when he needed off I would take time away from the others to drive it. Got old and beatup enough to leave that all behind when went to work in another field but kept the tools and did some small odd jobs I could afford to get into. Nowadays licenses, WC insurance, liability insurance, the costs of so much specialized tooling and the severe size of mechanisms where ever bigger shop trucks/equipment needed, I just can't see it.
Yup.. nailed it Miller.. HERE is the States>>Keep the "day job" for Medical insurance & "bills".. work after hours & weekends for "play" money. HERE, Business license's, business taxes, business insurances..a different "rate" on everything, once they find out its a "business". will keep you "working" just to pay THOSE business costs.. & you usually end up w/ no play money.. atleast for YEARS down the road.. Ask anybody here.. don't expect to make a "profit" for atleast 3 years.. {going legal/legit}
The thing about a business is that you can't grow a business and make a profit at the same time. The first 3-5 years are vertical growth. You don't realize how much stuff you really need. And it's not the things you think about. Most guys have tools or trucks or whatever. But, you don't think about things like brooms, wood blocking, a selection of steel stock, gasket material, markers, coffee maker, shelving, computers, circular saw, etc. For me, I have a house, a shop, and a mobile setup. I prefer to have duplicates of some of the basic items at each location. When I'm working at the shop, I don't want to run out to my truck all the time. Plus, if a critical tool breaks, it's nice to have a backup. But, it is very pricey. I've been full time in my shop for 5 1/2 years and it's unbelievable how much stuff I have accumulated. Once a year or so I do a purge and sell off some stuff I don't use.
How RIGHT YOU ARE Wes.. I've been home full time now for 4 months & have spent almost $7K.. on incidentals.. & haven't gone ANYWHERE or done ANYTHING that would be considered "fun".. Its funny how you thought, "hey, I dont need this crap..I could walk outta here & do THIS on my own".. All I can say is>> YOU BETTER have money in the bank!!!
You guys have been in my shop and storage obviously. Every time I got a "great deal" on a piece of equipment or an opportunity to expand the business I'd, inevitably, open the spigot wide open on the bank account with what it took to get it in service and producing.
I've been pondering a thoughtful response to this for awhile. Honestly to do side work you just do it. Cash only, warranty what you feel is worth it. People generally have realistic expectations when hiring a mechanic that does side work. If they want an ironclad warranty and all the latest tools they go to the dealer. I've always had plenty on the side. I turn away a lot these days. It'll be a cold day in heck before I go back on my own simply due to benefits. Side work is nice because you can be picky. When I have my eye on something and a clutch job comes up I jump at it. If I'm flush with cash and don't have a wishlist I'll pass on them. Don't put yourself in a position where you have to do any of it. Just my .02. I will say one particularly busy year I did more on the side than I did at my "real" job.
I enjoy being self employed. Its really all that Ive known since I was 27 years old. Even thought ive experienced the IRS, Insurance, the RED tape........I would still do it all over again. I think its the freedom I enjoy. I am my own master, I work when I need to but can take off when I need to. I don't have to worry about whether I have enough sick days, holidays, or vacation time. I go when I want, how I want, and for as long as I want. I make sure I have money put back for slow times, and try not to take on debt. I have a great core of customers that are loyal and will wait for me to get to them. I can have a 2 hour work day or a 16 hour day or even a few weeks off. I have contemplated going to work for someone else the last 2 years. I'm getting older, the pain seems to be increasing, and I cant keep up with the 16 hour day pace any longer. I just believe Ive been self employed so long now that I wont be able to make the adjustment now. I don't want to have to worry about being laid off, or terminated when someone younger proves to be more handy than myself. I have many customers that are entering the retirement age themselves, and it looks as though I will continue on until I have no more to work for.
I have been working on heavy equipment for over 30 years and on my own for 10 years now and would never consider going back to company employment. I see a lot of guys working their butts off for a company and saying the benefits and holiday pay are why they stay . I never argue that point with them but by the time I figure the dollars per hour and the tax breaks I get being incorporated I see them losing a pile of money and not knowing it. The only problem I have working alone is some projects won't allow me to take time off whenever I want. I am learning to say no more often because there seems to be no end to the work load. I find most of the tools I buy pay for themselves if you account for time saved. In sask we do have to pay into WC even if we're the sole employee. Review insurance carefully. Some make you pay for a lot of things you don't need but don't cover you when you need it or penalize you for using it in increased premiums.
With the cost of benefits for some places being so high I agree. There are exceptions. I did my own thing for better than 15 years. I've done the math and in my particular case it's a no brainer. I do enough on the side and own enough other properties etc I glean the same benefit of being on my own as well as the pros of having a GREAT job. I'm lucky. Others aren't. If not for this job I'd be on my own just like you. For all I know I could be back to it tomorrow! Haha
I think that in most cases, a self employed "one man band" guy will probably not earn as much as an equally skilled guy working for a larger employer when you figure the true hours worked. There's just too much inefficiency in a one man operation. It takes almost as much tools, equipment, parts, manuals, HR paperwork, tax paperwork, etc for a whole shop full of mechanics as it does for one guy. But, in the one man operation, all that stuff sits most of the time because there is only one guy to use it. When the one man band figures out how many hours he actually works answering the phone, running for parts, cleaning up, doing paperwork, and doing the actual work, the shop rate he charges often barely pencils out. Self employment is not for everyone. In fact, it's for very few. Especially in a "start up" type business. That's totally different than the second or third generation business owners who never had to tool up a business, it was handed to them. I would say that if your primary motivation is to make a lot of money, self employment is not a good bet. Some do, most don't. Being self employed does provide a lot of freedom. But, it comes at the cost of security. There is no unemployment, there is no workmans comp, there is no protection from discrimination by customers or jerkoffs who don't pay their bills. And, you have to fight for every job you get. There is always someone willing to do it cheaper or faster or claims they can do it better.
While all of the following COULD BE true, I don't think it necessarily is. All these things are matters of degrees, remember a shop operation has a lot more expenses too like people who answer the phone, higher rent, more regulatory compliance such as comp, meetings, bathroom posters, etc. etc. etc. If you want to make a lot of money you need to be an owner of something and have people work for you. (You can lose a lot too) If you are an employee, you are basically a one man show with a different set of circumstances than a one man owner business, that could go either way.
I'm only comparing a one man band to being an employee. If you want to have multiple employees, that's a different kettle of fish.
I get/got this a lot from people, didn't matter if it was construction/excavating/trucking/repair- " All your stuff is paid for and you have low overhead, you should be WAY cheaper than the bigger places" Um, no... I don't just pay myself for the hours worked on the task. I get paid for administration The company gets paid for overhead, even if I don't have payments I'll have to replace stuff eventually. I pay my employee (me) hourly, plus benefits, an "unemployment" fund, vacation/sick days, plus the company (like every company) makes a profit on the labor I get paid to do A/R, go to the bank, order parts, and there is some markup to cover bad debts Insurance Fuel.....
I do WAY better on my own than I ever could working for someone else. I'm not sure what the going hourly rate is today for journeyman field techs working at the dealers but I'm way over what they make. If I remember right , it averages 25% of field labor rates, so if the field rate is $135 an hour then the journeyman service tech in a field truck should be around $33.00. Then you have to consider what benefits cost is to you and a family (if you have one). I don't know of many companies that provide full health care at no cost to the employee. I have seen those cost an employee from 25% to 75%.........and that is coming out of their gross pay. You also have to consider the business and how you operate it. If your profit rate is low, you have to do a hell of a lot more work to make a decent living. If I average a 20% profit rate annually and I'm only grossing $250K a year......then I'm only netting 50K a year. If you have a new car for the wife and paying a nice house payment, there isn't a lot left. To me your killing yourself for nothing. You need to be at a 50% profit rate to do well in this kind of business. The type of work makes a big difference. A high labor/low cost job can reach a 90% profit rate, where a high cost/low labor can get you as little as 10%. If you have to invest in parts, you HAVE to make something off of them, especially if you carry liability insurance. When you do a job for some jackwagon that has decided he is going to drag payment out, its costing you a lot more than what he owes. If you buy $1000.00 in parts for a job and you average pay wait is 30 days, you have to make a profit because your money is tied up for that term length. If you don't get your money in 30 days it starts costing you BIG. I did the math one time..........that $1000.00 I tied up is money I cant use now to do other work. The next 30 days after that it doubles on the loss then doubles again at 90 days. It cost me $4k on average to let that ride out 90 days because I could not use that money to generate additional income. Naturally, if you get stuck, its 6K you have lost. I have been a self employed heavy equipment tech since 1990. Its a constant learning process as long as your doing it. Ive made great decisions most of the time, but a few bad decisions can sink your ship in a hurry. I do well because Ive been in this business long enough to have learned from the mistakes I made starting out. My best advise is the following......... 1. Be diversified. Don't have all your work with one big company. Have customers in different areas of construction. Even farmers and ranchers need service work. 2. DONT let payment drag out past 30 days.......and dam sure don't be afraid to ask for the money you have earned. 3. Don't take on major debt. You will have slow periods and bankers don't give a dam whether you are busy or not......They want their money every month regardless of your circumstances. 4. STAND BEHIND YOUR WORK. Redos happen to all of us, its just part of this business. It may not be your work but a failed replacement part. IT HAPPENS........take care of it and move on. If you treat your customers right, the work will come to you.......and more than you can handle.
I think you are misusing the term "profit". Profit should be what is left on the job after you pay yourself your agreed salary. Field service rates here are more like $110/hour for most placed except Cat. But, independent guys are more like $75-90. Without the clout of a stealership, the independent guys just can't command that kind of rate. Not here anyway. So if you bill 10 hours on a job, that's maybe $850 total. Now subtract say $30/hour for your fixed overhead (insurance, rent, utilities, upkeep, fuel, etc). Then figure in the other hour you will likely dedicate to this job later when it's time to enter expenses, restock the truck, follow up on the invoice, etc. Then pull out your total "benefits". Let's say $30/hr wages. Figure a dealer mechanic gets 3 weeks paid vacation, health insurance, vision, dental, 401K match, etc. Everyone's situation is different, but Obamacare for my family of 3 is around $800/month and it's nowhere near as good as the dealer guy is getting. Let's call it another $8/hr. Then add the other 3% you pay for SS, there's almost another $1/hr. Then you can have all kinds of variable overhead. That's time you spend looking for work, talking to customers, going to the bank, paying bills, learning new skills, etc. For a one man band, I don't think it would be far off to say that's at least 25% of your billable hours. So, let's say the dealer mechanic and the one man band both bill 40 hours in a week. The dealer guy works 40 hours and makes the equivalent of $1560, or $39/hr. The one man band bills $3400. He pays $200 for health insurance, and $1000 for fixed overhead. Then he works another 4 hours chasing the jobs and another 10 hours on the other crap. So, he works 54 hours for $2000. That's $37/hr. I'm not trying to be a downer, it's just reality. The one man band can certainly make more money total, but it requires him to work more hours. I certainly don't want to go back to working for the man. And, I'm sure there are places in the world where you can blow those numbers out of the water. But I don't think you can do it here.
My current boss thinks his Fertilizer and grain hauls are making him money. He pays myself and another driver while when he drives he does not take pay so the bookwork is a bit on the jaded side. I crunched some numbers pretty quick, cost of fuel, maintenance, emergency repairs, insurance, license and general backup fund for long life expendable items as brakes, tires, tarps etc. Added the cost of my labor time when I drive and the base figure is a negative a HARD negative. I will not bring it up as he IS the boss, it will have to hit him in the forehead on its own for it to make a mark. Local trucking company(My boss wannabe) does same operations, but is Choosy as to fees, miles driven, price per ton or bushel and how well can align a close return load, also has 122 trucks not 2. That is making money and that company Does make money, not exorbitant but enough to be profitable.
I guess I'm pretty lucky here . Not much of what you said applies to me. I never look for work it's more of a try to get away from too much work. If I dont know the phone number I let it go to voicemail. In fact I very seldom answer while I'm working. My wife does the paperwork taxes and parts pickup we have always lived on single income even when I was company employed. We live in Canada so we have health care supplied We are able to charge more per hour here the dealer is at 180 field and they usually aren't very well trained. I do bill time for parts lookup and other lost time All tools and equipment are a tax write off and I would buy a lot of tools doing company work too. I have no leases or payments , everything is paid for as I go. Accounting tells me when I need to spend more to cut taxes. I do realize that very few people are in the position I'm in and not everybody would have lots of work but you need to look after yourself or it isn't worth it. There is certainly a level of comfort that comes with company work but the profit margin here is definitely higher being self employed
I guess I'm lucky also. I have never had to beat the bushes for work. I get work by word of mouth moreso than any advertising I could pay for. I have had many customer recommendations to others they either work with of for.........so many that I have to tell them to slow it down because I get too far behind. I don't see a lot of lost time either. My computer/paperwork is done every day in just a few minutes, my scans for parts doesn't take long, and my wife also does all the bookwork and keeps everything nice and neat for my CPA. If your going to work a 40 hour week for just labor alone, you will not make decent money. I have to bill for travel time, mileage, supply costs, etc.... My biggest advantage against my dealer competitors is response time and knowledge. If you call Cat here for field service, your waiting at least a week and the other dealers aren't any better. Ive also found many times that I personally know more about the equipment than a lot of them do, with the exception of them being able to hook a computer into their systems. Too many times have a seen an issue be misdiagnosed by the field techs that come out......and it is quite often. I am usually able to be on scene within 48 hours, 24 hours if its local to me. The customers are greatly appreciative of this alone, and I guess I'm also a good people person. I can usually give them options on repairs that dealers don't do. I will admit that I do have an hourly rate, but it is hardly ever used anymore. I do most work by quote, bid, or flat rate now days. Most customers don't want to have their checkbooks "open" to an hourly rate here. Most all of them want to know what they will be spending to make a repair, especially my county, city, and state governments. I constantly am competing with the equipment dealers here and normally will win a job 80% of the time. Maybe I'm lucky.........but the biggest reason is the FACT that customer service provided by the dealers here has gone by the way side. Opportunities are abound here for someone that wants to work and treats their customers fair.
AMEN to THAT Vetech...
I'm sure it's different in a high profit industry like oil and gas or mining. We just don't have that around here. It's cheap skate farmers and small trucking and excavating outfits. The bigger construction outfits are all union and an independent guy usually can't touch them. That or I'm doing it all wrong. Probably am.
I know a couple independent mechanics that joined the operators union and pay their benefits on themselves. They do a ton of work for the area's union contractors and also work on commercial clients equipment in the refineries, paper mills, and the like. They get the union health insurance, pay into their own 401K, and pension so they come out fine. They still set the hourly fee they charge the client. Might be worth checking to see if the local in your neighborhood has a like program.
Anything involving a union would the worst case scenario. Let's hope it doesn't come to that. I'm baffled that you could be self employed and be part of a union. Who are you unionizing against?
I'd go on strike right away for working conditions and low pay. Then I'd probably hire myself on as a scab. Then I'd have to go out and picket at the gate in front of the shop....
Self employed local 150 mechanics and owner - operators of equipment have the best of both worlds. They / we don'i unionize against anyone. I can see this thread getting nuked by a mod very very soon ! And it should be.
We have had more spirited discussions about unions than this one, but they did not devolve so badly they had to be shut down.
Can't be any worse than the arguments I get in with myself. 1/2 my working life has been union & 1/2 non, both have been good/bad. Even I don't know what side I'll take day-to-day.
Sorry I haven't been keeping up with this thread. Family situation came up right after I posted. I don't have a shop (or even a yard) so I'm kind of thinking more along the lines of an arrangement where the customer supplies the parts (ie oil, filters, etc) and I simply just travel to their yard to do the service work and minor repairs (tail lights, wiring, etc). I figure if they're supplying the parts and such, I'll only be out for my time and not on the hook for $500 worth of oil and filters as well.
If that will satisfy you, then go for it. Make sure you charge travel time and mileage, it adds up quickly if you travel far and you cant give away what you are having to pay for yourself. If you do good work and treat the customer fairly......bigger and better opportunities will come, whether you want it of not.
What you are dealing with might not be the ideal scenario. I am from generations of small farmers. My father told me years ago that his parents farm only made a profit 1 year that he can remember. Its hard work just to break even......and some of the repairs they made on equipment would make anyone scratch their head in disbelief. If it wasn't held together with baling wire, it was taped. Sounds like you need to pull some of the area dealers work for yourself, its not difficult to do if you have the knowledge and experience. Tooling may be a problem on some jobs but you have to get going somehow. Ide be watching for the dealer service rigs and seeing where they are going. You may be surprised how many of their customers would love to have other options.
I'm not looking to get into anything much deeper than that at this point. I work 7/7 so I only really want 1 or 2 little jobs here and there to keep me out of trouble on my 7 off.
I was just telling someone today>> I love this, "not going to work" thing.. I get up at 5 or earlier.. drink coffee & play w/ the dogs & wife, until SHE goes to work at 10.. Then I get up & start my day.. IF I don't have pump work.. I have a "honey-do" list, that takes up my day. & start all over again the next day.. It "feels like" side work to me, when I get a pump..
How would your current employer feel about the side work? I have seen several times where the guy doing side work was all or a sudden self-employed. I like being self-employed.
That's true P&S.. Ya gotta read the "employee handbook"..
Already asked. As long as I'm not taking work away from the company they're ok with it.
I have seen this topic come up before and I never tire of reading the replies. I only have a couple of years left before my current employer(government) puts me out to pasture and have been wrestling with the "go on my own or work for someone else question for a bit. I have a fairly good bit of a clientele built up with my side work so that is the direction I am leaning. However I realize that part of the reason its been so good is because I have the pay and benefits of the full time employment. Much to drink on...I mean think on. thank you gents.
Speakin of drinkin'... Its AMAZING how much I DONT DRINK once I quit workin.!!!! I'd be willing to bet that Budweiser{A-B} stock went DOWN after December 2017..?? lol I'll have to do alittle research.. What did you decide to do 92 ?? Did you start your side bus.??
I think I'm going to hold off until I have a place with at least a small garage. Somewhere to store parts, supplies and extra tooling. I'm having a fair amount of trouble finding a secure spot to park a work truck right now as well. The joys of city living lol.
I KNOW whatcha mean.. I even thought about renting a space out here in the country.. but after crunching the #'s.. I found out REAL QUICK>>I'd be working for "rent money".. BTW> Budweiser stock has fallen from 111.00 a share>> to 94.00.!!!! I did NOT KNOW I drank that much.. {contrary to public opinion} LOL..
Just a couple of observations: 1) If you are married and stable in the relationship, have your spouse "own the business." She will pay your wages, she will do much of the paperwork (in most cases,) and as an employee, you get a bit better coverage both in labor laws and liability, (who owns your tools if you get sued.) If you are union, you get your union wages and health care. Here in Washington State, almost everyone I know in business for themselves "works for the wife." Both of you draw wages, so there is some form of tax benefit, (not sure exactly what, but all tell me about it.) 2) I would never work for cash, too often, people know the difference or think they do, so immediately you are at a disadvantage in negotiating the price for work. They offer 10-20% less than they would be willing to pay if not cash. The fellow that works on my car, (I'm not a mechanic by any stretch of the imagination,) refuses to work on a cash only basis. Cash customers assume you are working under the table and figure if you will cheat the government, you will cheat them. I bought steel at a small steel yard until about a year ago when the IRS and L&I shut them down for not collecting sales tax, not paying income tax etc. 3) You paperwork labor hours in most cases will equal your tool labor hours assuming you do everything above board.
New here, first post. I found HEF looking for a problem with my JLG e400ajpn but I called a tech in. I have a welding and fabrication business that I started 12 years ago, I was 23. I got tired of being a great employee who always got the short end of the aggravation stick. I do great now, but it was a huge struggle to start. Major things I suggest you look at before you figure out what you want to do is... Insurance, I use a broker as places they work with me to get the proper coverage. You would be surprised how a few words can change how your policy is handled when a claim hits. Depending on how you setup your business determines if you need WC. A llc says no, but a scorp says yes. Your customers may also require it. Long term tool spending... How much money do you want to spend for tools? The sooner you get them, the more you make later. But I suggest paying for all tools in cash so you don't hit a slow period and that causes problems. Shop... I have my shop on the same property as my house. 1 payment for the house and shop, not 2. And lastly, how long do you plan to do this..... 2 things I see happen a lot. You will either float the business or you will love being self employed so much you quit your full time job. What I mean by floating is you say you want to work 6 days a week during your off time, but it becomes too time consuming and you back off to 2 - 6 days which ties into the funds of everything posted above.