From: jmuth@pyrps5.eng.pyramid.com (John Muth)
Newsgroups: misc.jobs.contract
Subject: Re: 1706 Repeal Debated
Date: 17 Aug 92 17:38:26 GMT
Organization: Pyramid Technology Corporation, Mountain View

In article <1992Aug14.183514.29879@eng.umd.edu> chuck@eng.umd.edu (Chuck Harris - WA3UQV) writes:
>In article <183060@pyramid.pyramid.com> jmuth@pyrps5.eng.pyramid.com (John Muth) writes:
>>In article <1992Aug13.085419.8297@weyrich.UUCP> tnet.com!weyrich!orville writes:
>>>In article <183010@pyramid.pyramid.com> jmuth@pyrps5.eng.pyramid.com (John Muth) writes:
>>>>
>>>>If you are willing to hire yourself out on a per-job (ie. fixed bid) basis,
>>>>1706 is irrelevent. If you market yourself and find your own clients
>>>>1706 is not very relevent. 1706 only screws you if you work by the
>>>>hour through a broker.
>>>>
>>>
>>>Tell that to the clients -- they aren't taking any chances. Fear of the
>>>IRS is much more powerful in this country than fear of the devil; the
>>>company lawyers would rather be "safe" than try to argue with the IRS
>>>when the all the cards in the deck are stacked in favor of the IRS.
>>>
>>>Screwed is screwed. Period.
>>>
>>>orville
>>
>>Damn right I'll tell that to the client. I'll tell that to the client's
>>lawyers too. I know 1706 and I know the steps I take to ensure my company
>>complies with the IRS "20 questions". Just another objection to be met
>>as part of the sales pitch, right along with rate and payment terms. No big 
>>deal.
>
>It's good to try and educate your potential clients.  They won't listen to you,
>but it is good to try.

What do you mean they won't listen? Of course they will. Mine do.
>
>If your potential client has the choice between a person from a shop and an
>independent, and knows that the person from the shop will come with out legal
>difficulties, and that hiring the independent will require consultation with
>a lawyer; who do you think they will hire?  I mean REALLY?

My company does everything it can to ensure compliance with 1706. From the
client's point of view there is no difference between my company and a job
shop.
>
>>
>>Most job shops aren't much bigger than than independents. How did
>>they pass the muster? ...
>
>They didn't have to, they got Sen. Moynahan to sponsor 1706, and then they
>set up their shops to work within the wording of the law. (eg. all TSS's are
>employed by the shop.)  The 1706 way is much more profitable for the shops.

And my company is also set up within the wording of 1706. What's stopping you?
>
>>... Call themselves a company instead of an independent?
>>Nothing stopping you from doing that. Jump through a few hoops to get on
>>an approved vendor list? How hard can that be? Worst case they'll want
>>you incorporated. Maybe they will want to see proof of insurance. So what?
>
>Section 1706's comment section states that a corporate shell will not protect
>an individual from the requirements of 1706.  That recks all 1 person corps
>who try to work thru shops as independents.

You've changed the subject. I've always admitted that 1706 screws you if you
work by the hour through a job shop. I thought we were talking about it's 
effects on those of us who find our own clients. Some people claimed that
fear, uncertainty and doubt were causing potential clients (real clients,
not job shops) to refuse to talk to independents because of 1706. I simply
claimed that it is possible to organize your own business in such a way
as to calm these fears.
>
>There is a big difference between the what the shops do, and what you want to
>do.  The people in the shops are salesmen and nothing more.  They know how to
>handle people, how to hook them, and how to reel them in.  You are a techie
>you know how to write the fastest device driver in town, but you can't tolerate
>spending the entire day, for weeks at a time, on the phone hunting for clients.
>You have a lot of trouble finding the time to look for the next job while you
>are engrossed in the details of the current one.  You don't even know for sure
>when your current job is going to end.

Speak for yourself. Sales and marketing are a big part of my business. I've
learned how to handle people, how to hook them, and how to reel them in. In
fact, I have a competitive advantage over the sales-folks at the job shops
because I also understand the technical end of things. 

>
>The section 1706 amendment has nothing to do with the usual two party
>relationship between an independent and his client.  Nothing.  But that
>isn't what the problem is.  Many TSS's haven't a clue how to get their
>next client.  They are technically oriented, not people oriented.  They kinda
>accidentally got the last client, and would like to have someone who is more
>people oriented help them look for the next.  This makes for the 3 party
>relationship that is covered by 1706.

You restate my original point, 1706 is barely relevent if you find your own
clients. The only relevence is the fear, uncertainty and doubt amoung 
potential clients, and these aren't all that hard to overcome.
>
>>
>>The point is, gov't is always putting up barriers to business. What separates
>>the professional from the amateur is his(her) reaction to the barrier. In the
>>case of 1706, the client's lawyers will want to make sure your company
>>meets certain requirements. Find out what the requirements are and meet
>>them. Whining about how unfair it is doesn't get you anywhere. 
>
>Your potential client's lawyers will advise THEIR client to look elsewhere.
>These lawyers know that the waters are very muddy.  They know that
>fighting the IRS over a technicality, even when you are right, is a money
>losing proposition.  The lawyers know that their client will never be bothered
>by the IRS if they hire from a shop; but might be if they hire the wrong
>independent.

Which is why it is important that you organize things correctly.
>
>Section 1706 must go away!
>
>Chuck Harris - WA3UQV           | "Remember I am not really a tax expert, I
>C.F. Harris - Consulting        |  just play one on the net..."
>chuck@eng.umd.edu               |                      - Chuck

-John Muth