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Part Two: Technical Self-Employment For All
MoNickels writes "I've posted
part two of the article series encouraging the unemployed to take up freelance technical support, including advice on knowing if this work is right for you, marketing yourself, learning on the job, handling and educating clients, managing the business, the temperament required, and the negative aspects of the work." See part one if you missed it.
You charge enough to cover your expenses. Including insurance (not just life, business insurance covering liability, insurance on your equipment, etc.)
Until two months ago, I would have violently disagreed with this.
But recently, we interviewed this guy for a full-time position in our company. He had been a consultant for some time, and he had taken your point number 2 to heart. To say that he was cocky is an understatement.
He got a few of my technical questions wrong. This wouldn't have been that bad to me, but he was so cock-sure and arrogant, at least until I pointed out in no uncertain terms that he was wrong.
When we were deciding whether to hire him, I pointed out this flaw, and went at length about how I thought this was unacceptable. However, the other people on the team were impressed with him, and said of this, "He has been a consultant -- he has to act that way."
They ended up hiring him, much to my amazement.
The way this person writes tells me that he doesn't know much more about computers than his 'clients'.
I don't have to point it out to you that I am indeed technically qualified, but I will. How do you think I've run the tech for entire 65-person offices? My good looks? Do you want references, or what?
If it sounds like I'm writing about people who don't know what they're doing, that's because I'm talking about the beginning stages, where I was about ten years ago. I know plenty now.
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There are insurance plans that cater to the small business.. You may even go in with other small businesses and buy a group plan, getting a better deal. Remember there's strength in numbers. That's one of the reasons you see multiple doctors working under one roof. Kind of like marriage. :)
The same idea applies to many other aspects of one's business. Office supplies for example. Use your imagination.
From the article: It's better if you have your own laptop to take with you.
I'd go this one better: make sure it has the latest version of Windows on it, if not the last two or three on distinct partitions.
I'm not a freelancer, but I recently gave freelance web development a go while I was, ah, "between jobs." My one big client came back badmouthing the work I did two months after the project was completed, mainly because I telecommuted the entire project from home using my Mac OS X desktop. This slowed down the project initially, because they wanted to give me Windows remote access software (and weren't bright enough to get VNC working through their firewall) and have me work out major problems in person instead of on the phone.
A physical presence is everything to a client, followed closely by your willingness to conform to their needs instead of imposing your own. Your clients probably use Windows heavily. When working with them, you should too.
I had Blue Cross catastrophic insurance.
My wife (now ex) needed to have her appendix taken out. Cost me about $7,000 out of pocket. They don't pay for silly things like bandages, IV's, food, etc. They pay for the doctor, and the surgery.
Two years later, she had to have her gallbladder taken out (they shoulda just taken her brain out at the same time) that one cost me another 8-9 thousand. (Emergency room coverage is really, really bad)
Catastrophic insurance is pretty crappy, and after having these two episodes, I think that Blue Cross is one of the crappiest.
People may complain, and hate HMO's, but when your biggest priority is covering your ass (financially) they can't be beat. Those two surgeries combined would have cost me $10 with Kaiser.
No reason to lie.
One thing to ask yourself is, "how much do I get sick?" If you're single and rarely visit a doctor, a very simple policy could be good for you.
The company that employs me as a consultant offers health insurance. For me being single, it would cost $65 a week, for a minimum expenditure of $3380/year. The policy I have costs $130 every three months, for a minimum expenditure of $520/year.
But, the coverage isn't that great. The policy covers zero percent of the first $2000, then eighty percent of the next $8000 and everything after that each calendar year. So if I became really ill, I'm looking to pay $2000 (1st $2000) + $1600 (20% of 2K to 10K) + $520 (yearly premium) for a grand total of $4120.
I've been working for this company for about a year and a half. I've been to the doctor once, with the visit + meds costing about $250. Add that to six premiums, and my total output comes to about $1030. If I had paid for my "employer provided" health care, I would have already spent over $5000 plus any co-payments.
Now there is the fact that the "employer provided" healthcare is paid for by pre-tax dollars and I'm paying after taxes, but the difference unless I become quite ill still doesn't matter.
Still, with a plan, you only get the best you can imagine. I'd always hoped for something better than that. -CP
The corollary to this is that I have known many exceptional programmers, possibly even brilliant ones. The types whose algorithms flowed unflawed from their fingertips, and whose knowledge of the systems and software involved were deeper than mine ever will be, but who could never possess the interpersonal skills and level of patience required to support an unsophisticated client base.
This career path is decidedly not for everyone.
"That naive cube! How long must I suffer this!" --Sheldon J. Plankton
Hell, there are no rules here. We're trying to accomplish something. - Thomas Edison
If you are leaving an existing job, look at a COBRA plan to extend your existing insurance for 18 months. You will pay slightly more than the group rate, but it will guarantee you coverage. Do NOT let your coverage lapse!!!
The following is my personal experience and should not be taken as complete truth since I am still working through the process. Since my father-in-law is an accountant, I have been getting good advice to guide me through this process.
Until recently, I was able to keep insurance for my family through my wife's insurance. Since my wife no longer works we are looking for insurance for the four of us.
Surprise! my son's bout with pneumonia (sp?) more than 1 year ago has caused all sorts of problems with acquiring individual insurance. Not only will they not cover my 4 year old son, they want to increase the rates on the rest of us by 50%. This amounts to quite a sum of money.
We stopped the process of trying to get insurance online and contacted an agent. We still couldn't get reasonable insurance and no company wanted to cover my son. However, we have been informed that we cannot be refused insurance if we sign up as a group. This will also keep our rates lower than the quotes we had been getting.
How do you qualify as a group?
You need to have two people involved in your company. I formed a single member Limited Liability Company (LLC) in California about two years ago. I have since added my wife as a member of the LLC and we suddenly qualify as a group and can apply for group medical insurance. We are doing this now, so I don't have estimates on costs. However, I would like to mention some other steps I have taken because of this.
Normally, an LLC does not require you to be a W-2 employee of the LLC since the money passes through the LLC to you as an individual. This means that you don't have to file a corporate tax return or employer tax statements. I did not want the burden of managing all of the paperwork that comes with hiring employees and printing paychecks. Surprisingly, the payroll companies (ADP in this case) are very cheap and handle the paperwork for you. I will pay a total of $50/month for all of my payroll and tax reporting requirements.
Why would I spend $50/month on this?
When you have employees, you can set up an employee medical reimbursement plan on a pre-tax basis. Without an employee medical reimbursement plans, you can only deduct medical expenses in excess of 7% of your income (I think this number is changing). With a medical reimbursement plan, you can deduct 100% of your employees medical expenses (vision, dental, prescriptions, copays). However, you need to have employees for this. Since my wife is already doing the books and my billing, I hired her and gave her a salary (less than my salary of course).
What does all of this mean?
It means that you should consult an accountant. There are a number of ways to reduce your tax burden and get better insurance. Some of the things that seem expensive and a pain in the ass might not be. Learning the ins and outs of business practice can be time consuming and may not seem that important when deadlines loom. This is why you pay an accountant and follow their advice. If you are earning $100k/year and wasting $10k on insurance,taxes or other business expenses, you can afford to take some time to fix your expense structure or pay someone to fix it for you.
Good Luck,
--Keith
Well, I'm not bragging about working 50 to 70 hours a week. I'm just pointing out that those are the hours it takes.
Realize, of course, that about a third of that time is spent in transit (which I count as working, since I am clearly not playing) or at home writing proposals, writing reports, putting together and sending bills, answering non-emergency email, making notes for my own use, reading the tech sites and discussion forums, and keeping my updaters/patches/service packs up to date.
Which is what I should be doing now...
Wordnik, a dictionary project which aims to collect
Some states regulate this with Pre-existiing condition type laws, citing limits on excluding conditions and/or jacking your rates up because you are sick.
These vary state by state, but if I remember right, most of the rate-limiting laws used the "Community Average" for figuring out the rate.
Of course they can still flat out deny coverage.
Pete
I used to think this, and in theory this is how it should be. The problem is that insurance companies have negotiated DEEP discounts with the doctors under their plans, and as an individual you can't do that. In other words, you will get raked through the coals (until your deductible is met).
I just went to my file cabinet and looked up the actual insurance company's bills (that normally are not sent to me, but were as part of a response to a payment issue I had). These are from the past year, in Massachusetts.
Physical exam - $256.00
Blue Shield payment - $104.53
Blue Shield "adjustment" - $136.47
My co-pay - $15.00
In other words, you would have had to pay $256, but the insurance co. only had to pay $104.53. From the doctor's point of view, still not a bad income for 15 minutes of actual work (plus scrawling a signature on a routine letter the secretary typed up about the blood test).
The blood test associated with the exam was billed at $474.00. The Blue Shield payment was $114.62, the "adjustment" was $359.38, and my co-pay was $0. So in addition, with your catastrophic insurance you would have paid $474, whereas the insurance co. paid $114.62.
Now, perhaps you still come out ahead - stuff like this quickly adds up to your $1500 deductible. I don't know how much my company pays for my insurance.
There are group health insurance policies available for the self-employed. One trade outfit, called something obvious like "Association of Self-Employed Persons" (can't remember exactly) has a $100/yr membership fee, and as a member you can get Blue Cross coverage for the lowest available group rate.
It's the same outfit that runs TV ads occasionally, and yes, they are legit.
~REZ~ #43301. Who'd fake being me anyway?
I've been doing this since Feb 2000. Prior to that I was a network engineer for 15 years. I have a couple of steady customers where I sysadmin their network and tech support their workstations, rather than a bunch of "one night stands". The trick is to find the right fit with clients, not too big, not too small. I bill a straight $120 hour for most work. I carry a calendar (paper) to keep track of time and what I do daily. My wife keeps the books in Quickbooks on her workstation (W2K) for the accountant. A wife with benefits is one of the secrets. I enter the clock time on my workstation, into OpenOffice (Linux) spreadsheets to convert to hours and minutes then batch enter into Quickbooks invoices once a month. Bill for all your actual time! I do quite a bit remotely with ssh and rdesktop (depending on wheither it is nix or w2k). I try to bill 50 to 75 hours a month, which is a comfortable living for me.