So You Want to be a Contract Pilot Part 2

by Clint White

Now that you have decided to be a contact pilot it is imperative that you set yourself up as a business. Keep in mind your new “employer” is NOT going to be responsible for healthcare and especially taxes. The money that you make is going to be subject to a “self-employment” tax of 15.3% and if you don't structure yourself correctly that can be a BIG shock at tax time.

There are several ways that you can have your business run. I will go over a few, but I a not a tax attorney and each case is unique. Have a qualified tax planner or attorney go over your case as you begin, but here are a few ideas:

The tax code is MUCH more favorable to corporations than to “sole proprietor” business:

Basically setting yourself up as either an LLC (Limited Liability Corporation) or a full Corporation will give you many more tax benefits or advantages than simply adding the income as a “sole proprietor”. It also gives you a level of legal protection from lawsuits of which your tax attorney can be more specific and additional deductions for your business.

Setting up a Limited Liability Corporation is rather easy and not expensive. The laws vary by state but setting one up and establishing an account can be done online. Many resources are available and can easily be searched online

Once you have your business set up and Tax ID number, GET A BUSINESS ACCOUNT:

Once you have your corporation set up with the state you will also have to get a tax ID number (EIN) from the government as well for your business. With this complete, I believe it is VERY important that you set up a business account at your preferred lending institution. That way, those who contract with you can pay your through your business account and you will also have a record of spending from your business account. In addition it would be a good idea to also set up online accounting with software such as QUICKBOOKS or FRESHBOOKS to keep track of all of your expenses. Keeping things in order will benefit you greatly at tax time.

So you are set up, got your business going and are typed and current so now what?

As a potential contact pilot you will have many questions on whether you either “go it alone” and put yourself out there or signing with a company like ACASS or others that provide contract pilots. There are several pluses and minuses and you have to weigh each of yourself. Going it alone can have pitfalls, especially for the inexperienced.

However, sometimes you do get lucky, but the key to any job, especially contract is to NETWORK, NETWORK, NETWORK! Aviation is still a small community and the more people you know that more likely you are to get work. Like any other business it all about reputation and you want to build a good one. In my case in particular, I was able to network through Facebook and found my current long term contract job through a contact on the social media site.

If you do go with a contract pilot company, be sure to research each one. There are some good ones out there and they can provide you with an extra level of protection, but always do your homework before signing with anyone and ask around.

To recap, make sure you have your business set up, get a business account and decide whether going it alone or signing up with a contract company fits you best. In Part 3 we will talk a bit about the contract process and what to look our for.

Have you found contract work online? How about through social media? We would love to hear your comments!