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Well, I just did a LOT of research into it on the internet. I found USENET groups and asked about things. I found websites, etc. My Dad had done some of this, and I asked him about it (he had a CPA handle most all of his stuff so not a great source of info on the inner workings).

I incorporated while still a contract employee of a company. I was W2 to them with benefits...but, I got the inc. to try to work a deal with them to sub to them on future contracts. That didn't work out, but, when they ran outta funding for me...I was ready for the next job with my own company. You might look here for some good info on contract employee-ship...it gave me some good ideas on starting things.

Look at the IRS site...some rather dull reading, but, good ideas there. Also, you might contact a CPA and talk to them. Do your research before doing this. I find many of them will try to point you towards a LLC rather than a "S" corp. I dunno why...I found the S was better due to the savings on SE (Self Employment) taxes...SS and medicare. See my other posts on this thread for explanation.

I got the name of a lawyer and paid him $300 and gave him a company name. In a couple-three weeks I got the forms and all for my corporation. I contacted the IRS and applied for a EIN (employer tax number)...and was good to go. Once I got my own gig as a sub...I found out about getting a little liability insurance, etc. A good CPA like mine turned me onto contacts for things like insurance, etc.

There is a bit of paperwork...and it can be confusing at first with payroll...and everywhere you have to send tax money. I paid my CPA to show me how to fill out what forms and when for state, fed taxes and unemployment payments. I set myself up on QuickBooks Pro (yes, I have ONE computer with windows I can boot into just for this)...and that's about it. Oh yes...I did open up a business account, to better keep separate personal and business finances.

Yes, there are hoops, but, there are benefits. It is a big step, but, not rocket science. It is worth it to be more independent, save your own money, and be in charge more so of your own destiny.

It also helps as you go along to make lots of contacts and friends before you take the 'big' indie leap. Make lots of friends along the way...have some people skills (these will often carry you a little further than pure tech skills do).

So, do some research....do your best to learn your worth and bill rates of skills and jobs. Headhunters will be of help too, look for a good one.

It is a little scary at first, but, hey, if "I" can do it....most anyone can. Good Luck

You can start half way. 1st thing...look into incorporating yourself, it doesn't cost much. A friend of mine did it mostly himself for a few $$, I paid a lawyer about $250 or so, gave him a company name, and in 2 weeks I was a company. I went the "S" corp route, many will advise the LLC, but, do some research see which fits best for you. I like the S since I only have to pay SE taxes (SS and medicare) on the portion of my money that I make that I pay myself as a 'reasonable' W2 salary. Saves money that way.

But, in the meantime...look at job shops...you can start at some that will employ you as a contract employee...they get a big cut, but, it will easy you into the mkt....they find the jobs for you, etc. You can even start with places like this as a W2 employee of them, with full benefits...but, I'd not go that far, too close to being an employee.

Anyway, save up some $$....do a little research, and then, look for a contract employment co...and let them find your work for you till you get comfy with doing it yourself.

If you're a US citizen, look into places that do govt. work....those can be long term and you might can get on as a sub on a project.

Take a look here for good info LINK . Click the link for the 'original site', and read that if the main stuff is still under construction....

Good luck...the only thing scary about it is...that it is different, and you do take on a bit more responsibility for yourself...but,think of it, most people in the early days of the US did much the same thing, just in a more primitive time.

Do a little Googling around for "S" corporations. There are forms you need....and it varies a bit by state to state, so you might start with contacting your States dept of labor.

I paid a lawyer $350 and gave him a company name. He filed all the paperwork, and in a couple weeks, I was a company. I have a friend that did it himself, dunno what all hoops he had to jump through.

Do some research....many people try to get you to do a LLC...but, I liked the S corp since you can use that to save on how much Self Employment tax you have to pay on income (FICA, Medicare). Let's say for example, I bring in $100+ K annually. Now as an employee of the S corp, I pay myself a 'reasonable' salary (defined by the IRS) of let's say, $35K. Now all I have to pay the FICA and medicare on, is that amount plus income taxes....not on the remaining $65K+ .....that extra income falls through at the end of the year to my personal taxes...and you just pay normal income taxes on it. I think with sole proprietorships, and LLC's and the like, you have to pay that SE tax on ALL income...so, you can save tax $$ doing it the S corp way.

Take a look at this site to read up and get some ideas too. It appears they are redoing their site, but, look for the link for "original" site and read on it from there...good info.

Good luck....it is quite exciting, and you really start to learn about how things work with finance, tax, and the govt.....

Well, like most things that will pay off big...there is a certain bit of risk you must figure if you are up to dealing with.

You migth try to start off as a contract employee...kind of half and half of both worlds...you get bennie's...and a taste of the contract world.

Also take a look at this ...and look around. I just notice they've updated this...I read the old site and it got me started in many ways.

One way to look into if it is right for you...is research, research, research. Also, take a good look inside. Are you good at dealing with people? Do you have contacts at other businesses around you in your field? Could you ask at this time, someone if they'd hire you? You need to be able to network and have people skills for this. Again...it is easier to start off as a contract employee...I did it at a company (not with them anymore) called Diamond Data Systems....they're in the New Orleans area. But, there are tons of companies like that all over.

If you are a US citizen...and especially if you can get a clearance...look into one of these type places that has contract with the US Govt. Lots of work there...and often, quite long term.

But just talk to people that do it...and research....and read. It isn't rocket science, it isn't that difficult, but, it IS a different lifestyle than the normal 9-to-5 job...you do take on your own HR responsibilities, but, the pay off is more freedom, more choices, tax savings...and more money.

One link I had referenced in the past was http://www.cehandbook.com/. I found the site to be helpful for virtually all aspects of contract work.

Mind you, I've been a direct employee now for 4 years so its usefullness may have diminished a bit.

Good luck and I hope you do well.

Use the rule of 1,000 A job paying 65k per year should pay $65 per hour as a contractor. See PACE and the contract employee's hanbook. --Damon

See it here. Then join PACE --Damon

I've been contracting for the past 5 years as well. I've found it is better to be a contractor if you work for the right agency. Most agencies take between 25%-60% of your revenues for doing nothing but sending a bill out and writing you a check. Seriously take a look at PACE. P.A.C.E. stands for Professional Association of Contract Employees. PACE is a Virtual Corporate Back Office, Revenue & Expense Tracking, and the Best Benefits Package Available to ANY Contract Professional ANYWHERE in the USA. PACE also produces the contract employee's newsletter that has some valuable information for any contract employee. PACE bills the client for me and sends me the check. They do have a small 5% service fee, but it is well worth the benefits. PACE has also authored the The Contract Employee's Handbook. The handbook is a MUST read for anyone considering contracting. You might also check the PACE Agency Conversion Payroll Spreadsheet for more information. Be sure to tell them that Damon sent you ! --freak

A good website with some of that same advice is Contract Employees Handbook. I learned quite a bit from these guys.

It's not clear from your comment whether you want to be a regular full-time employee because you prefer it, or just because your savings is running dry.

If you prefer being a consultant, but you're not getting contracts, you need to up your marketing and sales. Some excellent advice is in the Contract Employees Handbook, especially the appendix on resources. Another good place to check is Janet Ruhl's site, Real Rates which tells what recent contracts have gone for by specialty.

(A great tip I heard is to bypass HR altogether and ask the switchboard for "procurement" or "vendor relations". You are, after all, a business offering a product, not a worker offering to become an employee.)

On the other hand, if you prefer to be an employee, dig out your trusty copy of What Color Is Your Parachute. Do the exercises, then go after companies who do what it is you want to do.

Either way, it has to start with what YOU want to do. You might take something else as an interim measure, but always keep your focus.

Depending on the agreement you signed with the recruiter who got you the job, a pass-through agency may be a better bet than incorporating. Pass-throughs act as your employer for tax, invoicing and collections purposes. But they don't take as much as regular agencies do because you have to find your own projects. Like a partner in a law firm, you have the responsibility of bringing in business and controlling expenses in your "practice".

Benefits:
You can deduct the same kinds of expenses.
They bill the customer and collect the money.
They deduct for pension, healthcare and taxes.
At year end, taxes are as simple as a W-2.
If you're buying a house or car, you look like an employee with continuous work history, instead of having periods of unemployment between gigs.

Downsides:
They charge 5% off the top in addition to withholding taxes.
You have to get your own gigs, they don't find projects for you.

One example is Professional Association of Contract Employees (P.A.C.E.). There is some good info on their site about using pass-through agencies. Also check their sister site, the Contract Employees Handbook for info on dealing with recruiters and the games they play.

• Contract Employee 's Handbook -- This explains better than anything else I've ever seen what the differences are between the all the options and presents one that most people don't know about.
• Janet Ruhl's Real Rates -- Lots of top notch contracting info here and a great BBS where you can ask more questions.

Good luck!

Fortunately, the same trend toward outsourcing that has placed many techies into a shotgun wedding with entrepreneurship has also created a web of resources they can use to cope. For starters, check out Janet Ruhl's Real Rates website. Also, those seeking a relatively painless (though pricey) back-office solution should check out Professional Association of Contract Employees (P.A.C.E.). And be sure to read the Contract Employees' Handbook by the same guy who runs P.A.C.E.

See the Contract Employee's Handbook, here, for a great discussion of the relationship between bill rate and pay rate, as well as how to tell fair agencies from those with fewer scruples.