[CI News - This issue of the newsletter was written by Nick Lepetsos, one of CI's early supporters. Nick's business takes a lot of the brain damage out of being/becoming an independent. I wish I had known about GoingIndy when I first went through the gyrations of setting up my business 32U eSolutions, as it would have saved me some grief. While there are several companies that serve independents, Nick's company is focused on Colorado-based independents.

As for what's going on with CI, well, I was extended on my contract, which chews up 40 big hours per week. I'm still ready to put out a big list of agents and agencies, and that is next on my priority list. Till I get some bench time though, it's going to have to wait. If you have any agents you'd like to recommend, or you are an agent and want to make sure I don't miss you, please get in touch. I have a decent list of over 100 agents right now who work the Colorado scene so it's just a question of putting the list on the site when I get the chance. - cl]

Professional Umbrella Companies, Are They Right for You?

By Nick Lepetsos - President, GoingIndy, Inc.

Regardless of whether you are new to the world of independent consulting or if you have been an independent contractor for years, professional umbrella companies offer many benefits and services that might make your career easier and more profitable. Here are some frequently asked questions to help you decide if an umbrella company is right for you:

1) How do umbrella companies save money for independent contractors?

By becoming a client of an umbrella company, you also become an employee of that company for payroll and benefit qualification purposes. In so doing, you are eligible to purchase health insurance at less expensive group rates. Some companies also provide a group plan for dental and vision.

In addition, you are also covered under the umbrella company's master policy for general liability, professional liability (E &O) and workers' compensation insurance. Depending on your business insurance needs, these cost savings can be significant.

Finally, most umbrella companies offer some form of a retirement plan such as a 401(k) for their client/employees. Although individuals can establish investment vehicles that match the benefits of group retirement plans, these can be expensive and cumbersome to manage.

2) How do umbrella companies save independents contractors time on administrative issues?

It has been estimated that independent contractors spend between three and seven hours per week performing administrative tasks not directly related to their project. Umbrella companies can reduce this time by eliminating the need for the contractor to prepare invoices, file quarterly estimated taxes, and maintain updated business financial statements. Umbrella companies become your "back office" for administrative duties.

3) Do umbrella company clients lose all of the tax advantages of being self-employed?

No. All independent contractors enjoy the benefit of deducting legitimate business expenses from their gross income. Most umbrella companies provide their clients/employees with pre-tax reimbursements for those expenses, thereby matching the benefit available to all self-employed individuals.

4) What if I have already incorporated?

Some umbrella companies can modify their services to help individuals or small groups who have previously incorporated. In most cases, there is no need to give up your corporate identity or change the structure of your company in order to enjoy the benefits and services offered by umbrella companies.

5) Can I use a technical recruiter to find work?

Most umbrella companies view the services provided by the technical recruiting industry as complementary to their relationship with the client. In fact, most umbrella companies do not take on any direct role in the job matching function, so the client is not only allowed but also encouraged to use any means at their disposal to find contract work.

6) Does an umbrella company replace my accountant?

No. While an umbrella company can greatly simplify the administrative issues associated with being independent, it is not a replacement for your accountant. In many cases, your financial affairs are made much simpler, and that can result in less work for your CPA and potentially lower accounting fees.

7) How do I choose an umbrella company?

The services and pricing offered by umbrella companies can vary considerably by provider, so do your research thoroughly. An umbrella company will be an integral part of your career as an independent, so make sure that you feel comfortable with the company you choose and the individual(s) who will be handling your relationship.

Umbrella companies seek to add value to your career in two simple ways. First, they allow you to save money on benefits that you may not normally be able to obtain individually. Second, they perform administrative services that allow you more time to focus on higher priorities (billable hours, work projects, family, recreation, etc.). In short, they save you time and money.

Nick Lepetsos is the President of GoingIndy, Inc. an umbrella company servicing independents throughout Colorado and a supporter of coloradoindependents.com. Nick's website is at www.goingindy.com.