Indie Mindset: You are a business

Hi June,

Help! I am an independent consultant whose boss treats me like an employee. I have had to stand my ground constantly to retain any of my independence. The situation is very blurry. I am also under contract for two years. What do I do at tax-time? A few examples of the confusion: -I have hired and trained his other independent consultants, as well as done their initial paperwork. -I am their manager, and on the job I am his "director of operations." -Out in the field working a booth, I use all of his equipment, and am paid hourly + bonus(no taxes taken, of course). -He claims that my contact lists are now his -I have to send him a nightly progress report -I receive constant requests to help him find sponsors for his company's events. It just goes on and on. The big whopper was when I picked up a new graphic design client for myself, and he said the client was his!! And the client was in another field! As I will have to deal with this for two years, I'm thinking I should report it to the IRS. I do not make enough in deductions for it to cost me too much. Also, do you know what happens to the independent consultant contract I signed if it turns out I am an employee?

Thank you so much for your help!!!
Kendra from Colorado


I think Kendra's email is an excellent example of oh-my-goodness-it's-such-a-mess kind of thinking. Where would one start to help or advise her? Where should she start?

Let's break up her email so that we can see just what areas specifically need addressing.

Is she self-employed or an employee?
It appears she is an employee. Her "boss" [Of course, you don't have a boss when you are an indie.] is getting all the advantages of having an employee but paying none of the costs. He can't have it both ways.

Kendra needs to call the Department of Labor in her county or state and report the situation and ask for advice.

Is she willing to deal with the consequences of such a move? She'd likely not work for the boss after that.

What are the terms of the contract she signed?
There's a very wrong idea out there that just because two parties enter into a work contract that they are NOT in an employer/employee relationship. Not so. It's just a way of attempting to skirt the law.

Kendra says:
"He claims that my contact lists are now his". Is this in the contract?

"I have to send him a nightly progress report." Is this in the contract?

"I receive constant requests to help him find sponsors for his company's events." Is this in the contract?

"I picked up a new graphic design client for myself, and he said the client was his!!" Does the contract state that any new client she gets belongs to her boss?

Why does Kendra think she must adhere to a contract but her boss does not? Perhaps she will need to have the contract reviewed by an attorney.

So many indies, at the prospect of making money, walk into a situation and sign on to it without looking at all the components. When work is offered to you, say, "Thank you very much. Let me go back to my office [or studio] and check it out with my business advisor." Remember you are a professional in business. Then call a friend or a sister, or anyone who thinks a bit differently than you do and go over the terms of the work offer. No matter how difficult to get things ironed out at the beginning it is northing compared to the difficulties once you've signed on.

Kendra, and all other indies: Develop your business mindset. People don't do things to you. You let them do it.

A most frequent comment from readers of my book, Self-employed Tax Solutions, is that it gave them confidence -- and it seems to me that in the situation we're looking at here, a major factor was lack of confidence.