[granos]

If you haven't done so already, you REALLY should look into setting up an LLC for contract work in the US. Legally separating your business assets from your personal assets is very important. It doesn't cost a ton -- varies by state and whether you involve a lawyer or not. It will make your taxes a bit more complicated, but consider that the cost of insurance against somebody trying to sue you and take your house.

[zrail]

Literally just buying an insurance policy is significantly less complicated and roughly the same cost, IME. Professional liability, errors and omissions, etc. cost me ~$1k a year when I was doing consulting for $1mm in coverage. My LLC taxed as an S-corp cost more than that just in tax prep services.

A single member LLC provides some benefits but those benefits often require a lawyer to invoke (i.e. you're getting sued, gotta file things and work the legal system). If you have insurance you just tell the insurance company and they hire the lawyers.

[londons_explore]

Perhaps the US is different, but here in the UK, I reckon that 95% of software developers will never go to court in their lifetime, and the remaining ones that do will settle for small amounts (ie. Refunding the customer the cost of the contract). Multi-million pound judgements against individuals are pretty much unheard of...

[ska]

E&O insurance is in absolutely no way a replacement for incorporation. In most cases if you need the former, you need the latter also, but there are many uninsurable cases where you want the protection of an LLC anyway.

[zenhack]

I seem to be in the most expensive state in the country for that. That's rent & food for a month.

But it's a one-time fee, so you're probably still right in general, but for the moment I'm mostly coasting on savings & sponsorships, focusing on the stuff I care about while I have the breathing room. I might consider being a bit more organized if/when I ramp up business again and am considering looking for new clients.