Dear Career Adviser:

Dear Career Adviser:

In your response to "Lost in Arizona" [Business, Dec. 3], you mentioned that becoming an independent consultant requires significant tax reporting. What do I need to do to go out on my own? - Contract Consultant

Dear Contract:

In the 1990s, self-employment boomed for contract recruiters and technical consultants alike. But more recently, demand for unemployment compensation benefits has soared, and independent contractor consulting revenues have plunged.

The result if that state unemployment agencies and the Internal Revenue Service carefully scrutinize whether a worker's true status is "independent consultant" vs. "temporary employee" and whether additional taxes are due on both federal and state levels.

Reclassifying someone from consultant to employee status can mean additional taxes and penalties for the employer. It can also create financial consequences for the consultant.

Therefore, you might want to establish your business as a corporate entity with a federal tax identification number and develop a client list showing that you serve more than one company at a time.

You can also bolster your independent status by getting your company included on a client's vendor list as an approved supplier. I would advise you to do this by making sure your work agreements are between the company and your business entity, rather than between your client and you as an individual.

Dear Career Adviser:

I'm a Unix systems administrator who is being offered a new position, but I'm not sure about the category of exempt vs. nonexempt. All the company has told me is that exempt means that they don't have to pay me overtime. Is there more to it than that? - Overtime Pay

Dear Overtime:

Generally speaking, the Fair Labor Standards Act of 1938, also known as the "wage and hours" law, establishes categories of workers and specifies whether they're entitled to hourly and overtime pay.

Nonexempt employees generally receive hourly wages, including overtime pay. Exempt employees, usually professional or management staffers, aren't paid on an hourly basis and are therefore exempt from overtime pay.

The law has some exceptions, however, and IT professionals who earn at least $27.60 per hour or $170 per week and whose primary duties fall into certain categories are exempt.

Here's a more meaningful explanation: Exempt jobs are the preferred track for a professional career path and management, says John Tebbets, executive vice president at JDT Staffing Consulting Inc. in Brentwood, Calif. Therefore, you are actually being offered a professional job whose category indicates a good future. Take it.

Copyright © 2002 IDG Communications, Inc.

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