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Moving from a Permanent Position to Contract Work?
duncan bayne asks: "I'm sure many developers in salaried, permanent positions have been tempted by the self-management, flexibility and higher pay that are the perks of being a contractor, while at the same time looking nervously at the uncertainty and irregular income. So, to all those in the Slashdot crowd who've made the change - what was it like, was it worth it, and what advice can you share?"
Contracting isn't exactly self-management. Many companies prefer to do all project management themselves and simply treat contractors as implementers.
When I first started out it was definately frightening, however as time went on they kept giving me more and more responbility, eventually they ended up with a contract CEO. Don't ask. But the perk for me is that since I'm contract I can hit on the hot workers at my workplace without having to worry about any side effects. Try it sometime.
I think it was worth it to me. You have to realize that you won't always get higher pay and more flexibility; sometimes part of becoming your own one-man company is that you have less flexibility because you are the only one to do things. And while the pay may be more per hour often you get fewer hours, or spend huge amounts of time marketing yourself and doing research to setting up contracts.
Still, on the whole it is worth it. You do have more independence.
Traditionally people following this route have had former employers as their main clients. With sites such as scriptlance, rentacoder, guru.com, and etc., you can now get a larger client base, and even start doing it before you quit your old job.
However, I do have to say, that if insecurity makes you nervous, maybe you shouldn't do it, or at least save up money for a while first.
I used this resource when I did what you are considering doing: "So You Want to Become a Consultant?"
But should be a stepping stone to having your own company that actually *makes* something. I was a consultant for about 1.5 years. Not great money because I was only doing part-time while designing my own product.
"Eve of Destruction", it's not just for old hippies anymore...
Feh!! Good luck to you. You can have it!
No folly is more costly than the folly of intolerant idealism. - Winston Churchill
I've been contracting for a couple years ago. I've discovered that contractors often get brought on board often to organizations that either are experiencing unmanagable growth or are stuck in the mud because of problems with business process. So it can be frustrating. But the money is better and it's nice to know that you can take a couple weeks off here and there (assuming you save your money, etc.).
I think it's really a lifestyle thing. I like being permanently (although that word is a joke in this market) employed from the standpoint of working on the same project and getting some momentum for a while. But I don't have kids. Don't have a mortgage, so that's really the only advantage to me. That and if you like your co-workers a lot and want to stick with them. Those are reasons I'd rather be permanent.
Not much help, I know. Like I said, it's a mixed bag. Permanence is about more than just stability in work. It's about stability in what you do, stability in who you work with. And depending on if the job is boring and if you like your co-workers this can either be a plus or a minus. I'm just glad I have the financial flexibility to make that choice and not worry (as much) about the financial end of it.
Sorry to not really answer your question, but I have one of my own.
I am a salaried developer right now but I'm interested in doing part time work as well. What resources do people suggest for this kind of endeavor?
Thanks.
I went from a cozy 3rd year job at an upstart, to managing my mom's spyware riddled m$ home network. Altho the hours are great with decent meal benefits a cozy corner office....... I for one, welcome avian flu. :[
contract positions also give the company the option the terminate your services more easily. You may or may not be paid for sick leave, public holidays, etc. You have to sit down and cost out the conditions that you have as a permanent staff member vs contract, sometimes it works and sometimes it does not. be suspicious of any company offer to move to contract, they must be getting more out of it or they would not make the offer.
There was an unknown error in the submission.
Unless I get laid off, as our company keeps outsourcing.
Enlightenment is a pipe dream. So where's the pipe?
Switching to Contracting? KFN
I recommend getting a copy of The Career Programmer: Guerilla Tactics for an Imperfect World by Christopher Duncan.
I read this after getting my first (and very bad) job as a programmer. It covers many aspects of working in I.T., including some of the differences between working as an employee or a contractor.
Good Luck!
I think I think, therefore I think I am.
You actually might be better off - there are plenty of opportunities out there for talented contractors these days, especially senior people. The money is better, but you need to probably incorporate yourself to properly 'play the system' IYKWIM ;-) Bottomline is that you can probably make up to 30% more/year being a consultants, but bear in mind that you also need to buy your own health insurance, pay for your own 401k etc. So, don't be timid when negotiating your rate - if you have been making $100k/year in salary you probably should ask for at least $60/hr as a consultant, otherwise you're probably just break even or even wind up not making much more. BTW, that estimate consider approx. 3 months of no work per year. Good luck!
There is a cost of not working for a company.
$300~$700 a month in paying your own health insurance.
Paying unemployment insurance
No matching 401k
Of course if you did not have them before, will not miss them now.
I made this move a little over 3 years ago. I was in a desperate situation in that my employer at the time was axing people left and right, good people too. I ended up getting dumped an entire bag of junk and work that I couldn't perform. My coworker, who was in an architect manager role had had enough and made the jump about 3 weeks prior. I ended up hooking up with the same contracting firm he went to and got myself under a W-2 employment agreement with them. He on the otherhand already had a 1099 corp established and was able to get the appropriate agreements in place for it. I personally didn't want to go through the motions of establishing personal health care, the 1099 corp, etc. It just wasn't something I could stomach at the time.
The jump was scary as all hell. I hopped on a new contract about 48 hours after leaving my former employer and started getting setup. Unfortunately, the position was not exactly as my account rep had conveyed with me. Nor was it as clear cut as the contractee's interview/position description stated. Needless to say, the first few weeks were a bit bumpy. I was able to establish a fairly good rapport with the client and things have been more or less peachy since. There is the temptation in some cases that, as contract, you will get paid overtime. I have to warn you. This is a blessing and a curse. When you do this stuff and go the extra mile, it sometimes becomes expected of you. While the extra money is nice, the long hours tend to really eat in to you.
In early June, after a couple of internal management organization shifts, I was under the impression that my contract was stable through the end of the year. Well 1 week into June, I was informed that I would no longer be needed in my current role after 30 June. Needless to say I felt that I had just been screwed over, my contract firm was outraged, and I was really starting to freak out as my, then, girlfriend (now wife) had just moved in. Money coming in was VERY important. Luckily, my contract firm has feelers in all over this particular company, they were able to secure me a position quickly in C++ land, which I wasn't overly proficient at as having programmed in Java for the last 4 years, but it was work. The way the agreement was inked, I would be paid as a salaried employee up to 40 hours, get 2 weeks vacation time, 5 sick days, etc. Overtime was a bit of a sticker. I have to work something like 6% overtime or some such garbage before I get paid for it. Since my earlier experience put a real pinch on me, overtime was going to be minimal at most if I could help it.
Long and short of this is that you should really research your options and your current situation. If you can stick it out and look for a perm position, go for it. If you are willing to "eat shit" for a while, you may come up smelling like a rose. My experience may or may not be the same that many people have. If you are confident in your skills and are able to adapt quickly to fluid situations, then you may want to try your hand at it. Make sure though that you have enough banked up to cover shortages in hours (i.e. around christmas time where code freezes may be rampant and actual work may be scarce).
Hope my long winded telling of my last three years has not been over the top or wandering too much.
I made a heckuva lot more money contracting but I worked my ass off. Sixteen hour days for three months at a time, no sleep, blood pressure issues. Did it pay off? Sure, but I can't do it anymore because of health reasons. If you're young (and it's not an age thing, but a health thing) I'd say go for it. The money I made contracting paid for my house, a couple sports cars, little things that make life a lot more fun if not a lot more meaningful. It beat the crap out of me, but was a million times better than my former job at a software company.
As long as you are confident in your skills and there is a market for them, you will usually do OK.
I made the change about 10 years ago. There have been a couple of lean years, but generally I have been
happy with the flexability and very happy with the money.
Also you, to some extent anyway, can choose your work.
For me, I have very few clients, one of which makes up the bulk of my income. I was sort of forced into contracting when that primary client couldn't afford to hire me full time with benefits.
The working from home is very nice, and yet due to my 11.5 month old, I am far less productive. There's something nice to having a real office to go (away) to.
As a contractor, make damn sure you have enough potential clients that can support your needs- for me, if my main client dumps me, I'm toast and there is no clause in the deal that they have to give me x-weeks notice since I'm not an employee.
Anyway, contracting has its plusses- and if you've got a good client base, it can definately be better than working in a cubicle. But you're also off on your own and you assume all of the risk.
So if you decide to wing it, work really hard to get and keep clients.
Well, it was definately worth it for me. - But it's not always more flexible. Sometimes a customer has a deadline, and if you promised it done to that date and are late, then you're gonna have to pull some hard work-hours the last week or so to reach it.
Sure, there's some flexibility in the fact that you don't have to ask a boss for anything, but as soon as you get enough customers, you're pretty soon going to have the same workhours as you would in a normal job, because that's when people expect to be able to get hold of you over the phone, also it's a lot more difficult to fit in a vacation if you have lots of work piled up.
And lastly, watch out, it's very easy to become a work-o-holic.
My <1000 UID is with a hot chick
... and I've been an incorporated independent consultant ever since.
I consider that to be the best decision I've ever made in my life.
No more twelve hour days at the office.
No more wearing a leash on your neck, every weekend, dialed in remotely, and having to provide coverage and support for the preciousssssssssssssss weekend produciton job runs.
And making twice as much money (even after factoring in the overhead of being self-employed), then the salaried schmucks who sit next to me.
And I still have a decent medical plan (and if I don't like my medical insurance carrier, I can fire them and get a new one).
And I still have a retirement plan, to which I contribute pre-tax dollars every year.
There's been an endless stream of recruiters, over the last ten years, constantly calling me and desperately try to raise my interest in some salaried position they're trying to fill.
I'm still looking for a single, valid reason why I should.
And to the scumbag bastard of a manager, who opened my eyes eleven years ago as to which side of the bread _really_ gets buttered (by shipping a dozen consultants and employees 7,000 files to do a customer site install, paying all the consultants' expenses and car rentals, while making all the employees suffer through some infernal car pooling arrangement), I have only two words to say:
THANK YOU!
i have a part time salaried job and also some contract work. the contract stuff is top notch pay and sexy tech, but, it comes and goes. nothing for months, then boom, a windfall
i keep the part time gig because it is close by to where i live and it's a nice low stress place... my hours are also flexible with them as well. i'm not making yearly bonuses like i did back in the dot com boom era, but then again, i'm not having a heart attack every day either. granted, it helps that it is a small company where they have that flexibility for me to work part time and at odd hours. when i was talking about leaving, they really wanted me to stay, so they were open to such a compromise (it helps i wrote the codebase for all of their operations)
so if you are in such a position (large impersonal corporations i don't think really care enough to keep you part time unfortunately, but small companies might) then i would think about the part time compromise/ insurance policy against being kicked out of your home and having nothing to eat
intellectual property law is philosophically incoherent. it is your moral duty to ignore it or sabotage it
I quit my 'career' IBM job back in May to take a contract job. I'd been shoved from Sprint -> IBM 6 months prior, and while it took 6 years to become disillusioned with Sprint, it took only 6 months for IBM to rip my soul completely out.
Anyhow. The contract job is, for me, a better job by far. My work ethic is solid, my attention to detail and creativity, equally solid. I was working 60 hours a week for Sprint/IBM, and I work between 60-65 hours a week now, but the results are sooo totally different. I can actually *see* the product materializing before me. My customer is more than thrilled with the results so far.
In summary, my current experience with contract work has been nothing but excellent. I can't imagine going back to a day-to-day grind-job, a "career" job.
Steps:
/bill
1. Put $20,000 in the bank - keep it there.
2. P*s* off your boss - you've had enough.
3. Be patient - always productive - Yes!
4. Treat your clients like you'd like
to be treated - always give value.
Twenty-five years,
The pay is usally fairly good as compared to employee (even considering their benefits.) If you do not live in metro area though you may find yourself flying into a job on Monday and returning home on Friday. If you like that life then go for it. I did it while I was young and loved the travel. Now that I have a child, I don't want any part of it. Additional benefit, as an consultant I have worked for many different companies, IBM, Cap One, Citibank etc etc. I've learned a lot of business domains. As an employee somewhere you may not get that. This business knowledge has helped me start my own consultant business locally with a vast array of clients. Headaches: paperwork! Ensuring you have a good accountant who understands the business of a consultant so you get max return. May be hard to find. Sometimes you may be aware more so than you should that you are just a consultant, not an employee. It hasn't happen too me but others have personally told me they were treated unfailry because they were not an employee. I've been doing it 12 years now, no regrets! Oh yeah, big plus, no more freaking annoying 360 evaluations. If that does not mean anything, those annoying evaluations where you judge your fellow co-workers. Ahhhhhhh!
Two wrongs don't make a right, but three lefts do.
I had a nearly-ideal opportunity; my employer was closing, and our sole customer needed a development department. I knew their offer was a panic reaction, and wouldn't last, so I offered to consult (non-exclusively) for a few months. That allowed me to launch my independent consulting career, which lasted a little over four years.
My problem, however, is that I'm not good at sales: cold-calling, lead-tracking, pavement-pounding. Once in contact, I could generally make a sale, and deliver solid work for good prices, but it was only enough work to break even after rent and taxes. When things temporarily slowed down, I didn't have much cushion.
I'm very glad I did it, but I wouldn't do it again without a bigger operating buffer or a sales partner. You really need to combine technical and sales skills to succeed.
Having done both at various times over 24 years, here's the poop for USA:
1. you'll have to make more than 50% as self-employed as you do salary to keep about the same benefits and have same income after taxes counting time between gigs making $0.
2. mediocre health insurance not including dental or eye for whole family: $430/month near chicago area, other posters might also give some rates.
3. Bookkeeping will be a pain: educate yourself on estimating and making quarterly tax payments or just opting to pay penalty, keep record and receipts, know tax laws for business expensing, entertainment expense, and use of vehicle, which is complicated. Tax software for the self-employed helps a great deal, highly reccomended.
4. Don't quit your day job and then start a business or look for contract work. Start your business while you work, or get a contract with appropriate start date and then quit job with proper two weeks notice, don't burn bridges. If you help your current employer to make a smooth transition you can usually use them as a good reference later. So no mooning/flipping the bird/taking dump in desk drawer of the CTO or your boss on the way out
5. Having a search engine friendly resume on internet has lead to most of my 6 -8 month contract jobs in last five years, not bulletin boards or job sites or snail mail or newspaper ads.
6. You can't restrict yourself to projects that are cool or exciting, some might involve some boring/legacy/archane junk that you've done before and the client needs someone with that hard-to-find skill. Happened to me twice in last 3 years.
5. You're in sales/marketing now, baby! of yourself - you need to network with people to see what opportunities are there, let people you you're willing to tackle projects, aggresively pursue follow-on projects and look for other work at clients.
I left my own company because my friend and I were going to team up and work freelance. When I told my bosses that I was going to leave (as expected) they first tried to convince me to stay but after they saw that I was not going to stay they said "Well, I guess that is all" and I said "Well, not really" and explained that I can still be contracted to do some of the projects that I worked in. Then, they were really excited and we both saw that it could be a good deal. They didn't have to pay for health insurance and for a flat rate have me work on smaller contracts. I still get emails from them about issues they have with environment I set up for them. And I help them for free for small issues.
I sent them a proposal and quote for how much it would cost to finish a major project they wanted me to work on. I quoted them at half the rate that it would cost for someone internally to do. It was a lot of money for me since at half their rate I would get enough to live on comfortably for a few months and still give me time to work on other projects.
They were slow to respond and never got me feedback on the proposal and eventually got an email telling me that they would like to continue the development internally. It was a bad economic blow for me and was living on the small projects that I expected to have fillers around that big project. I was making a fraction of the salary that I made at that company for many months, but I stuck with it. I ate less went out less. I cut down my bank statements from having hundreds of a transactions per month to a few dozen. The decision to leave was made in the beginning of this summer and used up a lot from savings to sustain, but I learned that a lot of the seeds that I planted a few months ago are just now becoming fruitful. I am in the process of signing 3 major contracts with people who I talked to months ago and I expect to be able to live on this easily for at least a year.
If I were to do it all over again, I would. It was the best decision I ever made. Freedom is great. I work more than I ever did at my old company. I am doing more advanced things and I am learning more. Because I don't have to be at the "office" I work whenever I want. I read more about other topics I am interested in.
BUT! discipline is everything. I make sure that I worked a minimum of 8 hours a day. I tried to do 10 though. If I wake up late, I work late. My housemates always comment about how disciplined I am and how I am always working, and it's true. Every moment you have, work. You also have to set boundaries. I never work on Saturday and Sunday. I turn of my cell phone and computer and don't touch my computer. I have another friend who does this and I suspect he's going to burn out pretty soon (i.e going to grad school).
what is nailchipper?
When he leaves that $100k/year job, have his former employer give me a call, k?
Weaselmancer
rediculous.
Prepare to be disappointed. Most contractors are implementors. That's one way. Another more albeit more negative way of looking at them is "sh*t shovelers", aka grunts. Most contractors are brought in when high level decisions and designs have been made. The contracting business is nowhere as robust as it was 10 years ago. With IT budgets slashed and the birth of offshoring, unless you're damn good and have made a name for yourself, I would not recommend it for the faint of heart.
-M
My biggest advice is don't move into the contracting world until you have clients. Try to get some relationships doing afterhours work, and or try to land at least one big ongoing contracting gig without enough lead time to quit your job when you get it.
When you can't possibly keep up with the work is when you should quit your day job, and you probably won't have either enough work or money at that point.
Expect that you'll spend a lot of time self-marketing and that it may take a long time to substantially add to your number of clients.
The taxes are a bit worse on paper - because you're paying stuff that previously your employer never showed you. But also bear in mind that you need to pay attention to estimated taxes; it is a lot easier to feel afloat before that.
Looking for freelance Actionscript (Flash/Flex) or ColdFusion work and/or freelance developers. Email me, put Slashdot
One thing you will discover when contracting, as compared to being an employee is that the political environment changes in a beneficial way. When you are an employee, frequently your boss will dangle or suggest that working a lot of OT will be reflected in your next review. Maybe, maybe the story changes by the time of the review. When you are contracting, your rate is negotiated up front - no ambiguous incentives.
I found this greatly improves the dialog between you the contractor and the people who hired you. They become much more objective, since promising benefits in the future for extras today is not part of the equation. If you are doing good work, you will stay and will be able to get an increased rate. If you are not, they will just end your contract. The employer doesn't have to worry about having an unhappy employee around, so in both cases they tend to be more honest about everything.
The other benefit I found is that some supervisors are always trying to figure out how to stay on top. If you are an employee and do a good job, someone above your boss may think someday *you* should be in that spot. If your boss is of the underhanded variety, he or she will begin to disparage you just to make sure the org chart has the same taxonomy, to be polite... Once again, if you are a contractor, you are not as likely to be interested in taking he supervisor job, so the person in that position will be more honest with you as well.
As for the "lack of job security" attribute, compare to being an employee. I don't know anyone in this business who has job security. I work as an employee now, but I always keep in touch with the people in the contracting world. Ultimately your success depends on your ability, technical and personal. Contractors generally has to have more social skills than an employee, because they have to sell their capabilities more frequently. I would summarize the situation like this: If you find a good employer with interesting work, stay there. If you don't want to be a FT employee (maybe you want to take off two months every year or something), or your current job isn't that great, be a contractor but make sure you are taking jobs that add relevant experience
Imagine how much harder physics would be if electrons had feelings! -Feynman, maybe
One thing to consider - you might make a higher wage, because the company doesn't have to pay for your health insurance. Make sure you have health insurance for your family!!, and you. This can be quite expensive, and maybe worth sticking to the company, as opposed to being an independent contractor. You might want to look at the cost and see if you really are making more as an independent vs being a company man.
If your life goes perfectly and you don't have any problems then great - you gambled and you got lucky. But what if you get into a car accident/ get appendicitis, or something worse? - Do you really want to pay out of pocket for medical expenses? What about eyeglasses or dental?
People get into accidents through no fault of their own. It's nice to be an adult and PLAN ahead for the unexpected, instead of just gambling on everything being perfect.
..........FULL STOP.
I think that people fresh out of school should seek out salaried positions for the first 1-5 years to build experience (learning the real consequences of a missed deadline is the single best lesson during this timeframe). After that, I think they should think seriously about going into the contract market. The "risk" associated with being a contractor (depending on your location) is no more than that of an employee. It's just a matter of different illusions/perceptions. The best job security, in my (not so) humble opinion, is always the ability to secure the next job . Unfortunately, most people tend to be too timid to realize that in most cases a company will take care of the bottom line, not the employees, first.
But your mileage may vary.....
If you work for contracting firms, you can do work that deals with various situations and diverse industries. In some ways, contracting can be safer than some corporate jobs. With all the outsourcing that goes on, it might be safer to be on the outsourcing side of things. But then again, not all companies do outsourcing or the outsourcing they do varies.
On the flip side of things, you can encounter slow times. It really depends if you're getting long term contracts or short terms contracts.
So, I work as a software engineer and I'm in that 50,000 - 60,000 a year bracket - we just recently took on 2 consultants from a consulting firms - these ninjas make over $100/hour! which, at 40 hours/week for a 6 month contract (26 weeks) is twice what I make in a year in half the time! Plus since these crackers have a consulting firm placing them into big companies, they're pretty much guaranteed work (yeah yeah, nothing is guaranteed, but....)
My company has a revolving door of constultants and the ones that are good get their contracts extended.
If I had to do it over again, I'd team up with Patni, or AppLabs or Tek Systems and get the same job I have now for 4x the money.
calling all destroyers
In most cities there is office space available for people like you. Don't asume that all office space is designed for growing companies with lots of employees. There are often spaces available where several individuals share the same facilities but do completely separate things. A Web developer friend of mine had a place like this once. basically had a common entry area that included a kitchenette (microwave, coffee machine etc.), a couch, and a coffee table with a couple of magazines where clients could wait. Surrounding that was a bunch of offices. The lady in the office next to my friend was a field rep for Dole Pineapple. Another guy was some other kind of marketer. Another one was some kind of programmer. It wasn't a bad setup and, like you say, it gave him someplace to go to get away from the distractions of home and get some work done. Plus, during the downtime he could even chit-chat with his "coworkers" on a business-y level, even though they didn't actually work together. There's something to be said, psychologically, for occasionally seeing another human soul besides your immediate family during the work week.
Of course, this does take a certain amount of money. But look at it this way: If your billing structure isn't enough to accommodate the very basics, like a roof over your desk, then you're probably either not charging enough or not working hard enough. Sounds like you need to go out and find yourself another client.
Breakfast served all day!
Before I funded Feeling Software, I researched the market for several months. I also contacted hundreds of former colleagues, industry contacts, etc. I made sure I had enough cash in the bank to last at least 6 months. (It takes on average 2-3 months before I get paid by my clients, partly because currency exchanges from USD to CND means that checks are frozen for a month.) I read several books, e.g. "Getting started in Computer Consulting (Meyer)". I had nearly 10 years of commercial experience for highly reputable companies. I also did managed the R&D for a start-up for over a year. I knew about government subsidies, how to deal with investors, etc. Basically, I was prepared for the next step. It's been 8 months now and overall we've been quite successful. 4 employees (myself included), a dozen excellent clients, including regular ones. Cool projects. I'm still not making as much salary as I could if I worked full-time. But that's because we keep money to invest in the company. Overall the company is profitable and we're always ready to hire top talent when we see it. Note that unless you're pro at what you do, and therefore already able to keep a good and satisfying full-time job, you're not going to enjoy contract work more than regular work. Good luck. Christian Laforte 3D Graphics Expert http://www.feelingsoftware.com/
I do contract engineering work for mining and oilsand clients. In the last 5 years I have worked, in order: in Calgary, Vancouver, Edmonton, Vancouver, Edmonton and am currently in Vancouver. Two of the lean times have been very lean and forced the move from city to city, the other moves were chasing better opportunities.
Two other comments:
-I could never have made this work if I was encumbered with a wife/offspring.
-I will never go back to being an employee. Well, if I get hungry enough I might, but if I'm not hungry, then I'm not interested in being an employee.
-AD
I left a stable permanent positionat a small software company in order to strike out on my own. I was hard but eventually I landed and long-term contract with a large company. Overall, I didn't like the contract. I felt the contractors were treated as second class employes. I just recently accepted a permanent position in the public sector (non-profit hospital - this is Canada, eh :). I believe it will be the best of both worlds. Doing what I love for and employer that doesn't judge me based on how much money I can earn for them.
I wouldn't count on flexibility and higher pay. You'll have two jobs where before you had only one: You'll be the boss, but you'll also have to be the employee.
I've seen my income go both well over and well under what I was making before going into business for myself. Overall, I'm making less money than I used to, but I'm far more independent. If you value independence more than money, self employment is a good gig. If you value money more, stay in the korporate world.
More money? Check the prices of health and life insurance, the cost of your currently paid vacations and sick days, and calculate your tax burden. If you're going to have more than one or two clients, you're going to be lucky if you can manage to make much more than half of your office hours billable. If you have only one or two clients, all it takes is for one to pull the plug and things get really dicey really quickly.
When you're self employed, you have to deal with slow pays, bankrupt clients, and slow to completely dry spells that can last for several months at a time. If you don't have the discipline to set at least three and preferably six months' expenses aside, it'll take only one dry spell to leave you flat broke. Then you'll discover that the better (higher paying) employers don't look favorably upon renegades. "How do we know that you won't return to your own business as soon as things pick up for you again?"
That all said, I've been running my business for nine years now, exclusively for the last seven. I would never go back to wage slavery. Who needs higher pay, shorter hours, better benefits, social interaction... wait a minute...
Warning: This signature may offend some viewers.
Don't be naive. You'll have one client whose investment in you is smaller than it would be as a paid employee. You get no workman's comp, no health insurance, no dental plan, no 401k, no child college plan -- and you'll pay quarterly taxes, self-employment taxes and whatever fees you cough up to incorporate yourself. Are you an accountant? You'll need one. If market conditions change, your client (your former employer) will outsource your sorry chairwarming behind to Trinidad. As a "consultant", you'll have to wrangle your own consultees, and do you have time to sell yourself as well as generate and sell your billables? Unless you've got serious credentials at the Ph.D. from M.I.T. altocumulus stratum, you are living in The Happiest Land of All, i.e., Fantasyland. Face it. If your people skills were THAT good, you'd be in marketing, you'd be smiling, and you'd be C.E.O. of the company you just left.
``Tension, apprehension & dissension have begun!'' - Duffy Wyg&, in Alfred Bester's _The Demolished Man_
KFN
I work in AEC (Architecture, Engineering and Construction) industry, but I can't believe that the 'basics' of freelancing would be much different in the software industry. Just to give you some perspective, I have 15 years experience in the Computer Aided Drafting, Architectural Design, Structural Design and Construction Project Management. About 80% of my work is done in front of a computer. I also operate a website that gives my clients access to their projects.
I always dreamed of working for myself and believed that it was the only way that I would ever get paid what I thought I was worth. Last March, my employer that thought it would be a good idea to offer me a reduction in salary by $10 an hour. It was actually a good time for me; I developed many business contacts and relationships. I also had some money in savings (for the first time in my life). When I presented this 'offer I couldn't refuse' I quit on the spot. I felt really good about it!
Shockingly, over the first few months I became extremely busy, yet the lag in time from work to getting paid became a problem. A few times finances were really tight.
Once you get cash flow moving, things become really great! I had to learn to see projects as Investments and Risks. As any investment, there is no guarantee of return (or that you'll get paid). There are things that you can to minimize the risk, but there is always risk.
The benefits are great: I have an extremely flexible schedule, yet I work many hours. I love not having to check in with a supervisor. I am free of office politics. The tax benefits are extremely good, except for FICA; your employer pays half of that now. (You'll be expected to pay all of it; 15% of your income, quarterly).
Some clients like to treat you like an employee. Some ask, "What kind of work you have on your plate?" Sometimes it may be honest curiosity, but remember that all you owe your clients is first-rate fulfillment of what they contracted you for.
Also, learn how to write contract proposals!
I pulled contracting gigs from 2k1 to 2k4. And it was okay. I was a single early 20s guy, fresh out of the military with vetrans health care and a strong liver. Jump up to 2k4 and I had a wife, kid, and a house to keep tabs on. My last contract was killing me because health insurance was not included and the bill for family coverage was $980/month. So a year ago I got hired on to a local very successful and stable company, and I've been loving it ever since. No more down time with unemployment and odd jobs to pay the rent. No more putting my resume into 600 applicant positions. No more worrying about what will happen when I finish a project. Nope, I took a slight pay cut, but I gain full health insurance, 401k with 8% matching, profit sharing, a yearly bonus (depending on sales), a cubicle with a window view, and a project list about a mile and a half long. Job security is a beautiful thing!
-Rick
"Most people in the U.S. wouldn't know they live in a tyrannical state if it walked up and grabbed their junk." - MyFirs
It is easy to underestimate the value of the benefits that most "permanent" employees have. I recently considered a contract position that was going to pay $70/hr. In my current position I make good, but not great, money as a Java architect. I did the math and figured up the monetary value of my benefits (stock, 3 weeks vacation, sick days, holidays, 401k) and the "break even" point for me was somewhere between $60 and $65/hr. Oh, and by the way I wouldn't see any money as a contractor for about 65 days. And the contract was only four months. The extra $5-$10/hr just wasn't enough. I would basically have to put all of that money in my "rainy day" fund, so my disposable income would have been about the same.
My point is that many people look at hourly rates in the range of $60-$70/hr and *assume* that it is a lot more money than they are currently making. Once you factor the value of benefits, that may not actually be the case. The worst thing you can do is jump into a consulting engagement assuming that you will make more money.
The economy is moving, in terms of multiple phases within decades even hundereds of years, from an essentially supply vs demand percieved dynamic, to a subscription based more liquid dynamic. So in a sense jobs are like subscriptions, if you have multipple contracts.
I got out of college and got a decent salaried position in NJ at a small online retailer. The pay was about what you'd expect. Then I quit because I was moving across the country, to Idaho. When I got here, I took a contracting position at a very VERY large computer/electronics firm here whose name consists of two letters. I was writing automated scripts in TCL to test the firmware on certain hardware devices they make. In general, contractors were looked down upon as second-class citizens, even though we made up like 50% of the workforce. Like in "Office Space," I had 8 bosses at LEAST. Nobody knew what anyone else was doing. Total corporate clusterf*ck.
After being there for 3 weeks, they pulled our entire team (about 50 contractors) into a conference room and told us the client had to meet a budget cut and we'd be put on "furlough" for 3 weeks, effective 5 minutes ago. I started looking for a new job the next morning, found one a few days later and I've been happy as a clam. Making more money, benefits are MUCH better, and it's a friendly collaborating working environment with no cubes.
So while contracting at some places might not be bad, my experience left me with a bad taste in my mouth.
Intercarve Networks, LLC
Working @ home doesn't work so well with small kids around- "Honey can you change DD's diaper?", "Honey can you watch DD while I hop in the shower/run to the store/etc/etc?" Make sure you've got your own work space that is strictly off-limits to kids and significant others while you're "@ work". Otherwise you'll find your productivity is a fraction of what it should be.
So long, and thanks for all the Phish
with bidding on projects on the job boards you mentioned is that you have guys from the US and guys from countries like India bidding on the same jobs. The US contractors want $80/hr, the Indian guys want $10/hr. It's very tough to land a freelance contract that doesn't require you to be onsite.
Otherwise, 8 out of 10 contracting jobs are usually doing the crap work no one else wants to do. And working with other contractors IS A ROYAL PAIN. Most of my contracting gigs paid great, but the work was pretty undesirable (read: CODE MAINTAINANCE
The first time I did this, I transitioned from an FTE to an independent contractor. There were some resentments about this, and I was seen as disloyal by some. Politics being what it is, I was soon released.
Next time I did it right. Working at a small consultancy in a pretty independent way to start with, I started volunteering to take small projects that didn't pay until delivery, on a fixed bid basis. Then I was able to hire some guys to help me and turn around and justify being paid for these projects as a 1099 because I had deductable business expenses. Soon I was a sole proprietor.
(I've always maintained my own health insurance, for years before this, because of experiencing the problems caused by a layoff. It's not for everyone, but in this case it helped me transition easily.)
Benefits: control of my own schedule, able to work for more than one shop, hire my own guys and delegate as needed.
Downside: higher risk, times with no income, people wanting to push project risk downhill
An example of that last one would be, shop accepts a project on a fixed bid, promptly fucks it up spending half the money. Asks me can I complete it for what's left. When I'm done the client of course has some changes to make before acceptance. If I have 6-12 man months in it, I can't afford to say no and walk away. Fun fun. You just have to make sure to leave a cushion for contingencies in your bids, and when you are doing someone a favor, make sure you tell them that. Don't rub it in, but also don't just say "sure!" Make sure they know you are taking a hit. Because these things add up in the relationship.
All I know about it is that consultants contribute a lot of code to the Daily WTF
Everything I need to know about copyrights I learned from Slashdot.
Consulting maxim:
You have no job security, even if you think you do
From what I've seen, this is getting to be pretty equal in a salaried/hourly job as well. I've seen projects set back months because someone copped an attitude with the wrong person. Not to mention a highly paid consultant can get the project back on track, and for less than your annual salary in most cases. Not always true(well, really, it is, but people want to think it's not)
and the direct employment has included some pretty short term stuff with failing dot coms. I made good money ... and I was gone in 6 monthes. The turbulence or if you want to talk like a Republican, the dynamism of the tech job market means you wont have a lot of job security in either mode of employment.
so why am I telling you to go for the contracting if it interests you? You MUST like honing your skills and learning new systems, languages, applications etc and if you can hack the contracting, it will bulk up all but the most stellar resumes [IMHO].
SLASHDOT: news for people who can't concentrate on work or have no life at all and got tired of yelling back at the TV.
Contract jobs kinda rock. Just Imagine, working at different states of the US doing what you enjoy. I don't mind the contract positions that is a new trend for programmers. But, for a someone who is married and have kids, I can see the downside in contracs..
Being self-employed is alot more difficult, challenging and risky than simply being an employee. You'll have less vacation and alot more stress. Doing the technical work is the easiest part of being successfully self-employed. The upside, however, is potentially unbounded.
/everything/. Understand what your good months are and what the lean times are. Chances are, if your business is like most, the fall will be your best time. Mid-summer the worst.
/everyone/ you meet, who they are, what they do and how they fit into a "funnel" of prospective clients. You just never know who is going to turn into a customer or refer business your way.
Before making the switch from salaried to contractor, get your personal finances under control. Your own finances will dicate how long you can float during lean times and there will be lean times. Reduce your monthly burn as much as reasonable. Don't take on unnecessary debt. Be wary of recurring expenses. Make sure you have good records. Get comfortable with Quicken. Understand how much money you need on a month to month basis in order to stay afloat. Know how long you can burn before you run out of cash. Beware of estimated taxes. In a highly variable income environment sometimes making too much money can be worse than too little; one $40K month can blow you into the next tax bracket throwing your whole year off and possibly running you into trouble on April 15th.
Understand pre-tax vs. post tax money. Understand what's a business expense and what isn't. Based on performance year to date project out what you expect to make in the months ahead.
Buy the NoLo Press book - Software Development, A Legal Guide. Read it.
Buy The "Getting to yes" book by the Harvard Press. Other books to consider: "Inside the tornado", "selling the invisible".
Your first year is the most important. Keep track of
Understand that you're not self-employed, you're running a business.
Get a contact manager and start jotting down
Contracts and new relationships take years to develop. Start building them on day 1.
Generally avoid the temptation to allow one client to be too large a percentage of your income. Even if the money is good, sometimes scaling back and taking on more clients is better. Think portfolio diversification.
Assuming you're doing coding, everyone will ask you for exclusives on your code. Find a reason that makes sense to them that they don't want an exclusive. Try to own everything you write. License it non-exclusively to your clients. Over time your portfolio of code will be worth vastly more than the higher rate you might make by licensing it exclusively to your client - and that will be your leverage. If you do it right, you can move from hourly consulting/contracting to building a business with real value (and frankly most clients will want to know that a codebase has a life of it's own.)
If you're making the transition from employee to contractor with a client already willing to fund you nearly full time, it's easier than striking out completely on your own.
If you're totally on your own, forget everything you think you know about marketing. Forget every vacuous marketeer you've met. Find a good one and befriend them. (trust me on this one, marketing is the key to surviving losing that huge client that's been keeping you fat, happy and complacent all this time.) Understand how to speak in the language of your target audience. They will probably not care about abstract interfaces, execution times or coding elegance. When pricing yourself speak in their language; understand not what you are doing, but what it means for them. A good resource of articles is http://www.turningpointemarketing.com/ - disclaimer, these people are a customer of mine.
Every moment of every day you are self-employed has to be marketing. Doing excellent code is marketing. Telling someone what you do is marketing. Build a website about what you do.
Before a business partner and I decided to go on our own, I made a point to have at least six full months of money at my current standard of living *before* we made the leap. Because of certain choices I/we made in landing some of our contracts, it got dicey towards the end. Luckily, it has gone well since.
I'll tell you what: Once I saw how quickly the six months passed with contracts dragging on and on, I've since made two pledges to myself:
A.) to have at least 1 full year of loot in the bank in cash and solid investments (low risk bonds and the like) juuuust in case
B.) to always save at least 10% of my gross income monthly even after I'd achieved A.
I personally watched four good-sized to lucrative contracts all at once drag on FAR longer than any reasonable person would have expected. Then there's the normal invoicing and payment delays, particularly so when working with very large companies, government, or educational institutions.
As for the mechanics of savings, IMHO ingdirect.com is a great way to do just that as they offer superior rates.
Best antivirus software
I used to be a contract programmer. I did mostly C++, Windows, UNIX, some SQL work. I kept getting hired as a C++ guy with not much opportunity to move to the newer web stuff. Well, to make a long story short, it's all web stuff now and the only C++ work that's around is embedded stuff, which I have no experience with.
What I'm trying to say is - On job, try to find some way to use the Next Great Thing (TM). Anyway you can. Otherwise, while you're on a contract for a year or more, the contract job market changes and then you can't get work.
Classes in the new technology? HA!
No one wants to hire a contractor unless he has at least a couple of years of experience. That's why they're hiring a contractor. Because if they were willing to train or have someone with less experience, they'd use someone internally. Or, you can just read up on something, lie about it, and just hope when they check up on you, they don't find out about it.
Evil people don't think they're evil. - George Lucas, Making of Ep III
I've been freelance since 1998 and I'm on my wife's benefits. Yes, it would be much tougher without her (at least WRT benefits).
There are other ways, although I haven't thoroughly investigated them, such as through The Freelancer's Union. It's expensive there, but not really out of line for what your employer's paying for you in a "real" job.
Having made this same decision 3 months ago, I've been quite fortunate so far, but I attribute this to a few things.
;)
First - I didn't just jump ship, I'd been moonlighting for about a year before hand. This gave me a lot of experience in managing projects and relationships and learning some warning signs for bad clients. Yes, there are people that you don't want to work with. Moonlighting also helped be establish a client and referral base, which I'm sure most consultants will agree is the key to success.
Second - I planned ahead. Save up 3 - 6 months of living expenses if you can. The worst thing to happen when you're a consultant is to take a job because you need the money and not because you want the project. What you bid on and work on should be something you like to do. One thing to keep in mind is just because you make $15,000 one month, doesn't mean you're going to make $180,000 a year. I try to pay myself about 50% of revenue for a month. The rest goes to taxes and business expenses and building up a solid base to get me through the down times (which I plan on seeing sometime - but haven't yet - knock on wood). It also saves on SS / Medicare taxes, which you'll be forced to pay double now.
Third - Get benefits rolling BEFORE you quit. Typical health insurance applications can take 3+ months from application to coverage, longer if you have health problems in your family. You can always go for COBRA from your former employer, but that's usually very expensive. A better option, in many cases, is a high-deductable HSA plan.
Forth - Get organized. I've used Billing Orchard for my invoicing system and I highly recommend them. Whether you want to use a service like that, or create / manage your own through quickbooks or what ever, the key is to keep on top on client account management.
Finally - My approach to consulting has not been to go after the 90 day / 6 month full time contracts, but rather string together several 10 - 20 hour / week contracts. Is this the best route? Maybe, maybe not, but from my point of view, if one client drops me for whatever reason, at least I didn't lose 100% of my revenue stream. Whereas with a 90 day / 6 month contract, I think I'd feel more like I'm applying for a new job every few months.
Anyway, that's my 2 cents and that along with a buck twenty five might get you a cup of coffee.
Inasmuch as you have to give it 200%, though, it also forces you to stay current. You don't have a whole big team you can brainstorm with; you
There are (IMHO) two kind of contracting/consulting jobs:
;)
:) You don't want to get to the point where you'd take any job at any rate because you're flat broke.
1) 100% real independant: you find the client, you convince him, you do all the work from home.
2) being pimped: some firm calls you, you go work "in-house" for their client just like any other employee, but you're paid much more than if you were a "perm" since you're expendable, no insurance, no retirement, etc.
I've done both and I have to say being 100% independant is a lot tougher: you must spend a lot of time shopping the client, convincing him, making sure he's happy, negotiate a bit when things aren't as smooth as planned. It can pay big time, but it can also backfire BIG time if you mess up. Working for a firm relieves a bit of pressure since you don't have to find the contract yourself, just apply for the position, but you still have to negotiate your rate with someone working for that firm who's sole goal and main skill is to negotiate you down
But no matter which way you go, there are some very important skills you need to work on.
- Presenting yourself in an appropriate manner (dressing, talking)
- Be at ease and used to negotiate, deal, do an interview, etc.
- Build_your_network. Keep in touch with previous employers, senior employees, friends who know people who know people, etc.
- Know your stuff (whatever you do, C++, project management) from A to Z.
- Control your budget. Spend as much as you need to live well, but don't buy that cool new 5000$ gizmo unless you have 6+ months of savings in front of you
You need to EAT thru every book you can find on selling, consulting, having your own business (IRS, accounting) and get as much advice and backup from friends and family. You need to get over any shyness or insecurity in order to give the impression of someone in control, able to accomplish the task at hand.
From there it's up to you. Depending on your skills, you may very well end up having no security, not much more money. But if you really do your homework and identify and work on what you see as your weaknesses (eg: talking in public, negotiating your rate without the fear of "not getting the job") I can garantee you'll be happier than you were in your "perm" job.
I had some tough times and it wasn't easy all the way. Got to a point where my whole fortune was 800$ and I had no work in front of me, nothing. But then again when I look back, I don't regret one bit. The kind of money I'm making now is the salary I dreamt of making "in 10 or 15 years when I'm a VP or big manager here at company XYZ".
I started my own consulting/programming business after I was laid off from my last job.
:P"
I plan on never having another "real" job again. I don't do much in the way of long-term contract work - most of my work is on a freelance basis out of an office in my house.
Things I love:
- My 15ft commute
- Better coffee
- The dress code (camo shorts and a "Parental Advisory: Atheist" t-shirt)
- I get to play waaay more golf
- All sorts of cool techy toys now become tax-deductible
- The boss actually gives a sh*t about the employee
Things I'm not so keen on:
- You have to make an *effort* to interact with other carbon based lifeforms. This is important.
- A certain amount of uncertainty over the regularity of income. Keep a savings buffer!
- Trying to explain what I do to women in bars
Things my friends point out:
- "But you have no job security"... Answer: "Neither do you
If you didn't have the constraints of being an employee, would you work more or less?
If you'd work more because you get paid by the hour, enjoy what you do, have a desire to understand how businesses are run, and now have a vested ownership in the results, then you're on the right path to start contracting.
If you like having the business do the business part for you (legal, financial, insurance, management, etc), like knowing that you can leave work behind after your 40 hours a week, and you don't go home trying to figure out what else you could be doing (and not just because you signed an IP agreement) then you're probably better off as an employee.
It's a big leap, and everyone here is right when they say you take on more costs (but you already knew that I hope), that there's more work, taxes, risks, etc. But it really comes down to a personal desire, since if you have that desire (and hopefully some ability that people will pay for), then everything else will work itself out.
Has been doing the job shop thing since 91. He has worked 12 of the 14 years and made better money than he did as a salaryed Engineer (EE) for Hughes Aircraft. He can do it all, hardware or software, but prefers programming. He took early retirement in 91 and gets the GM retirees discount on all vehicle purchases, plus his full pension. Right now he is in Phoenix with Honeywell for the fourth time, 60+ hours a week for hourly wages over $40/hr, thats over $100K/year. He spent 3 years in Syracuse, NY and did the QA on every line of code in the fire control computer for the Seawolf Submarine. Also was in Austin, TX and did the Y2K thing for MCI for 2 years. When his curent job ends he will be "really" retired, so he says, because he hit 71 in May. His retirement will be like the other two and last until he gets bored or offered enough to come back. Then again he might just take his 24 foot boat and go fishing wherever he and his wife feel like. I know that they will be here at either Thanksgiving or Christmas, last year they were in California with their 4 sons and families. It can be a great way to do things. Dave has met some people that take short jobs and go where they want to do things. Spend a summer fishing in MN after work and winter in TX for deer season.
Professional Politicians are not the solution, they ARE the problem.
My consulting business took off the day that I decided that I would never again perform work on an hourly basis. It makes for difficult negotiations, but I insist on a flat fee and a set completion date. This allows me to over-perform by getting jobs done ahead of schedule, and my clients dont bother me about adhering to a schedule. I show up for meetings and any other duties at the client site, but I dont let them watch me program, and I aint there to teach anyone how to do anything for free. This way, I can manage 4-5 programming jobs at the same time, and never have to watch a clock. I get a bonus if early and a fine if I am late. If you fill out a timecard in order to get paid, then you are a temp. Plain and simple.
If your height to weight ratios are off, no matter that you don't smoke, drink, use drugs, have high cholesterol, high blood pressure, etc., you are going to have a difficult time getting decent independent health insurance.
The biggest suggestion I can make is to always assume that after your contact is over, that the same amount of time you worked, you will not be working when the contract is over. Saving your income is key to ensuring that you can continue to work as a contractor in the future. As a rule, I tend to divide my money into three groups: 25% for taxes, 30% for savings, 45% for myself (which includes health insurance). While the taxes percentage might vary for you, I own a house and receive tax breaks for the interest and for my business expenses. If you rent, your tax percentage should be higher.
Also, the hardest thing I found is that from time to time, you need to swallow your pride and get that part time job to hold things over, or do work that you can do but is out of your area. For example, a programmer might do a few websites on the side until a programming contract comes along, etc.
As a side note, if you are comfortable in front of people, teaching at a community college or other location is a great way to make contacts, make some money and even pay for some benefits -- and not to mention the educational discount for software and hardware for your business...Something to look into...
One of the things that you'll want to do right off the bat is talk with a lawyer about startup costs and the type of business that you'll be going into.
It might not seem important now, but the choice between SP, Partnership, DBA, LLC or S-Corp will have a big impact on your tax situation and your liability.
Also try to get a handle on contracts (the legal kind) as you will need to know where you stand when you sign one, and what you will be responsible for. You don't want to have a large company coming after you for damages for mis-work that you never intended to last more than 6 months, but they never decided to take your advice and use it as a temporary fix. Investigate Errors and Omissions insurance and have lots of escape clauses and late payment penalties in your contracts.
Just most of all, keep records and make sure it's on the up-and-up so that no one can claim fault, or if they do, you have the documentation to exonerate yourself.
Contrary to popular belief, life is not a bitch. It is far far worse.
Any money that escapes the grasp of the IRS is free money :)
Still - don't let that drive your business decisions. Don't buy a new car every 3 years because you avoid taxes if your old one is good enough. More people get into trouble by attempting to spend money to minimize taxes than those who end up having to send a check to the IRS.
On the same token, and assuming Social Security will continue to be viable in the next 30 to 60 years (big leap o' faith there!), minimizing your income for self employement taxes might hurt you later on when your social security benefits are calculated.
A fine is a tax you pay for doing wrong and a tax is a fine you pay for doing all right.
>>
Until I see the first US security cleared person (who can make 20% higher than a regular gov't employee) "transitioned" or "fired", then I'll believe "Job security does not exist anymore".
It happens all the time. I worked for defense contractor that had a fairly small office, about 80 people. They lost a major contract, and over 50% of the staff was laid off. Many of those laid off, including me, held SSBI/top-secret clearances. This happend around 2000.
What's more, many of the cleared people could not find other jobs where they could use their clearance. The defense contractors were just not interested. Now the contractors are begging for people with clearances, but it's too late, they have all expired.
Go figure.
...I will not do it again. I contracted as a 1099 with a financial firm for a little more than a year, ending my contract last month. On paper, it sounds great. The amount of money I was making sounded like a lot more than it really was, though. As a 1099, I had no benefits of any kind. Conservatively, take 30% to 40% of what you will make contracting and set it aside. For me, that was money to put towards taxes at the end of the year, have a little cushion when checks are late (and by late, some of them were really late - two months in some cases). Depending on where you live and whether you want it or not, medical insurance can be a dealbreaker. I was in New York at the time (now in Pennsylvania) and insurance for myself and my wife would have ran nearly $900 a month. I took a position in Manhattan last month for about ten percent less than what I was "making" as a 1099. But it is worth every bit of the loss to me. Now, I have paid holidays, sick days, 401k, insurance, etc. You don't realize how much you will miss it until it is gone. If you do decide to persure a contract, get everything detailed in writing. Notably, try to get an established payment schedule from the employer. Also, take the time to talk to an accountant, as he will be able to tell you what you really need to make to support your lifestyle and what changes you might need to make. Sounds like good advice, and I wish that someone would have offered it to me before making the decision that I did. On the flip side, I know that there are people who absolutely love contracting. Maybe I had a sour experience, but the certainy I have with a "regular" job is something that I can't even begin to put a price on.
You are in a maze of little twisting passages, all different.
It's hard to say, because you're non-specific, but I will assume that the $100.00/hour is going to the agency that placed said contractors. In that event, the absolute max you might expect them to be taking home would be $50.00/hour, but it's probably closer to $30.00
I did some contract work where the client was paying $350.00/hour for my services, but I didn't get any bonus or any other special gratitude -- I just kept getting my $80,000.00/year salary and the "pleasure" of working for a week without sleep because I had to do my site work on the graveyard shift and had to spend all of my daytimes in meetings, both with the client and with the firm that placed me there.
That's the catch -- you can be your own boss and half your income goes to taxes and insurance, or you can work for an agency and they take half your income to pay for taxes and insurance (plus a little skim, of course) and then you *do* have a boss telling you when/where you're going to be working each week.
So, do you have the aptitude and drive to be your own sales team and accountant? or do you want to pay someone else to do it for you?
Be who you are and say what you feel, because those who mind don't matter and those who matter don't mind. - Dr. Seuss
Surely the point of _contract_ors is that they work according to their contract (which differs, usually in length and reward, to a standard employees contract of work).
So if your contractee states he'd like you to where blue lace panties when you configure sendmail, then hey-ho! (but I'd probably renegotiate!!).
A "contractor" is the field of programming is somebody who works at a company, doing a regular job, but gets his/per paycheck from a head shop. I worked as a "contractor" for 5 years, and was never once freelance, and I never "consulted" with anybody: I just worked.
As a contractor, I was paid significantly more. I was paid hourly instead of salaried, so I was actually paid for my time. I got to take off time between contracts as I liked, because most of the contracting firms had tons and tons of jobs waiting. Also, I wasn't generally involved in inter-office politics. I got to "job-hop" without being damaged by it on my resume... I simply chose 3-6 month contracts so I wouldn't get bored. Switching jobs that frequently allowed me to grow my skill set and experience very quickly. I never did any more paperwork than anybody else because I was a regular W-2 employee. I had all of the benefits that I wanted because I could easily afford benefits and much more.
As a contractor, I usually felt bad for the "permanent" schlubs.
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Being in my late 40's, it's almost impossible for me to find a technology or programming position with an established company. I'm either too old, too set in my ways, will want too much money, over experienced, too primadona, or too close to retirement age to be of any consideration compared to the 20-somethings out there. And since I don't want the headaches or want to play the politics of a management position, I'm basically forced into becoming a freelance consultant. With that in mind - I love it! I make my own hours. True, I usually work 60+ hours a week. But, I get to choose to take a morning off now and then without having to ask anyone for permission. Yes, the financials are a bit of a nightmare, but once you get the hang of it and keep track of every cent made, and every receipt, then it's not so bad. Also, if you have a lot of experience in a specific area of technology, and you have a knack at writing then you could also look at writing articles and books. Between writing and programming, I'm managing to keep pretty busy.
TheTiminator
It's typically much easier to get, not as expensive, and often geared to the self employed. The reason is that you have to bear a whole lot of cost out of pocket, sometimes as high as $5,000 (per year). The reason they are available cheaply is because the deductable means that you aren't likely to waste money on unnecessary services. Low or no deductable insurance leads to many people going to the doctors every time their kids get the sniffles, when really it's nothing at all that requires meidcal attention, or getting perscriptions for drugs that aren't really medically necessary. Well when you bear those costs yourself, you are much less likely to do it.
However, like normal insurance, once the deductable is paid, they handle it all. So if you are severly injured and rack up $50,000 in medical bills, you pay the deductable and the rest is handled. So you never have to worry about your bills going over the deductable in a single year, you are covered for that which you cannot afford yourself.
So the way you make this work is by putting money away in an account to pay that deductable if you need it. There are even special Health Savings Accounts for that which are tax-free. So as long as you keep your account full, you are covered no matter what.
It's actually quite a viable system, for those that don't blow all their money. You pay for small stuff, rather than your insurance, and they are there to pay for big stuff if there's the need.
Just Google for high deductable insurance if you are interested. If you cannot manage money and blow your whole paycheck every month, it's not for you, but if you can save (and to run your own business you need to be able to) it can be a very cost effective alternative.
I switched to contact hack about a year ago.
Can't say how it will go - so far I have been able to fill the pipeline with prior contacts and projects, and a few new projects that come by.
Good: I could take 3 month (planned) vacation this year.
Bad: It's a lot of work to manage the pipeline. It's bit unnerving when the pipeline gets pretty short.
Don't know how it will develop - may get back into being an employee, who knows. But you definitely learn a lot. I realized how insulated I was when working in a development outfit in a company as an employee. If you are practical/professional programmer/engineer (as opposed to researcher types), I think it's definitely worth it take the turn to see how it is.
Good luck,
Anonymous coward programmer
PS: You may want to set up with a sales/rainmaker type of outfit eventually, unless you like doing the adminstrative/sales work.
I'm a contractor (just switched about a month ago actually)
Firstly, I really enjoy it (I'm a firmware guy) and so far I've spent massive amounts of time just getting my own gear to work in my home office.
Dead boards, making damn cables, etc all eat into your time.
Anyway, my health care is through ehealthinsurance something or other (google it)
I got it online and it was approved within a couple of days.
I'm a single fella, 37, non smoker, fairly active chap and a PPO with a $4k deductible and PPO dentist costs me $101 / month.
Pretty good I think. I have no kids or anything like that though.
I switched last January from being employed at a bank to being a contractor at a primarily software development shop. The switch was kind of scary for me because I got a family which needs certainty and health insurance. So I got blue cross which isn't as good as what my employer used to provide but it does the trick.
Things I love? No more idiotic bank rules to follow, which only seek to prevent me from actually doing any productive work. Being able to work in an agile environment. Being able to actually focus on software development versus idiotic worksplace politics. Not having to sit in meetings half my life coming up with specs that will never be followed.
Things I don't like? You pay more taxes because you are self-employed and you have to deal with it (quarterly payments, etc...). That's my only complaint.
I've been a contractor most of my 25 year career and I think it's the best way to go. You have no politics, fewer meetings, managers listen to you more than they listen to their own employees, and they don't waste your time as much. If you need something they tend to get it for you right away. There's also the variety, and for me the knowledge that I have a planned end date helps alleviate any frustrations and negatives there might be. I don't take jobs that I don't want, and I get free training by going after projects where I know most but not all of what's needed and can convince them that I'll be able to learn the rest quickly.
The only downside I can think of is that sometimes I do get attached to a place and don't really want to leave. But usually I can think of a couple negatives that balance that out.
To find jobs I use temp agencies such as Volt, and smaller ones that spring up all the time. I just send out my resume to the usual suspects when a project is winding down, and they find the jobs and arrange the interviews. All I have to do is show up. On average my projects last 6 months to a year and I have 3-4 weeks off between.
Agencies hire you a a W2 employee, so they pay their half of social security. I work a little over 45 weeks a year. Taking health insurance cost into account, my situation is roughly equivalent to having a full time job at $70-75k/year with 5 weeks paid time off and benefits. Not bad for web/db dev, and with no downtrodden-masses feeling that can come with a permanent job. Best of all, no maintenance assignments or beeper-carrying. All my work is new dev.
All in all it would take a mighty big carrot on a mighty big stick to lure me back to FTE.
Contractors appear on the surface to make enough money to hit on hot co-workers.
Many programmers like contracting because it's a way to run a business without having to deal with people. They give themselves a company name, write off their apartments as work expenses, and speak to no-one for days at a time even though they occasionally need to win clients.
Most of all the experience of running a company/contracting is fair game for getting into corporate management later on. Most of the managers in multi billion dollar corporations are former contractors who listed their contracting job as "president of X".
Contracting does not produce more income than full time employment. Contractors devote a substantial amount of their income to higher social security tax, medicare tax, health insurance which companies provide their permanent employees. In fact, most contractors are paid less then "permanent" employees because they don't get annual bonuses or severance.
The payoff is the corporate management promotion. The contractors of today may be broke, but in a few year's they'll be multi billion dollar corporation, homeowning, plasma TV watching, managers while the rest of us are still sleeping in shipping containers.
My own boss: I pay about $773/yr in workman's comp insurance. Another $338 for business liability. I pay another $567 for the year in unemployment insurance. Taxes == 2x medicare and social security.
I pay myself a salary of about $45k a year. Everything else I pay out as corporate dividends. Those dividends are taxed at 5%, with NO payroll taxes: no medicare, no social security, no unemployment. My effective tax rate is quite a bit less than if I were a regular employee bringing home a paycheck with the same base salary+dividends I earn now.
As for the contract house employee bringing home 50 - 30% of the client bill rate... that may be so for some. But when I've gone through a contract house, my take home percentage, as a W-2 in the past, was more like 60 - 65%. But now when I do that, and I don't like to, it is business-to-business, not W-2, and I take home about 75% or more of the client bill rate.
Larry
I've actually had less autonomy.
/.
I know! I've compared the number of hours, over the years, as a FT employee vs a Contractor, and let me tell you, the time spent is far, far less as a Contractor than it is as a FT employee when it comes to time, on the job, reading
A few things to consider:
Insurance -- that magical health benefit that most employers pay a big chunk of -- you get to find out how much things really cost. Oh, and that year I didn't have insurance, my 14 year-old daughter flipped her quad out on some sand dunes at a beach and had to get air-lifted out by helicopter. That 15 min trip cost me 20 grand to find out she just had a slight concussion. (12 grand for the airlift, the rest in hospital bills, ouch!)
Free Time -- People think you have lots of it. Once I got a phone call in the middle of the day to change a flat tire on one of my wife's friends car. They might have said thanks, but geeze, they could have called AAA. Sometimes you do have time to do as you please. My family likes to take our motorhome camping at the beach and go surfing - great family memories. We also take two weeks off in the summer and rent a beach house. I also took a week off to go to my son's scout camp, BUT, if I'm not working, no cash is coming in, and no new jobs are getting lined up!
Distractions -- Sometimes I can think of a million things to do, except work. Like go to CostCo with my wife in the middle of the day. Anything that is unproductive and not producing billable hours, nets zero dollars at the end of the day. Sometimes you make up for wasted days at night, and come crawling in at 3 am -- only to have to roll out of the sack at 7 or 8 am to get a fresh start. Yup, my light seems to always be on.
Kids -- (see distractions above) You gotta love 'em. I'm home when they leave for school, and here when they get home. I proofread essays, make science projects, help with math worksheets, etc. I always have a few kids sneaking into my office area to hog my computers. It is kinda funny having techie kids though. My 17 year-old daughter was calling this kid a school a geek because he was bragging about his website. (free yahoo site) I asked her how many website's she had running on my servers. She thought a minute and sheepishly replied, "Three, I guess." It's also funny when your kids complain about how slow a download is taking, only to find out they are downloading a 600 meg demo game CD! My kids laugh a other kids slower DSL lines, and have never heard the crackle of a modem.
Loans -- When banks hear you are self employed, they want crawl up your posterior with a microscope before you can get a loan. They want to see bank statements, cash flow and tax returns. Don't skimp on the taxes and take too many deductions, in two years you might need to show that you actually MADE some money. After a few years and things stabilize, it gets a little easier. Or maybe I'm just used to the financial rubber glove with no lube.
You are your own boss -- That's right, nobody bossing you around, except the people you work and the guy signing the checks and every bossy secretary. Also, you are the janitor, the maid, bookkeeper, rain-maker, and pee-on. The buck starts and ends with you. If something goes wrong, it's your fault and you had better document each and every thing you do as if it's going to litigation. You will live or die on written memos and sign-offs.
That's it in a nutshell. If you got the nerve, cash in the 401K and get ready for a roller coaster ride. Is it worth it? You bet. I am healthier, happier and have time for the things that matter most -- my wife and four kids.
Newt-dog
My Doctor prescribed daily nasal saline irrigation, hehe
Recently I started a contract job through a consulting firm. This is quite new to me because it's not like a normal temp agency job. The pay is REALLY good, the contract 5-6 months, the full perm opportunity is great, and the people are very nice. For those who want to be a contractor, I highly recommend going through a consulting agency to hook you up with work. It takes 1/2 the burden off of you while you look for other opportunities. I am in Canada it's fairly easy to become a contractor here. 90 bucks and you're all setup. Right now, I make more than double than my old job. That's really impressive considering I'm in my 20's. Wednesday, I start my first contracting position, and I hope all goes well. One thing that soothes me the most is that the company has a 5 to 15 year employee rentention rate. Good luck to all those out there.
Working for myself was nice because I could select the projects that I wanted to work on and then 'become' that type of business. I didn't make a lot of money that way since it took longer to do things, with every project being a new adventure. But it was an excellent education and I got by. Obviously, I was lacking economy of scale that larger and more assembly line ventures enjoy.
To run your own business, you have to be someone with the capacity to make sure people pay, be able to negotiate, deal with folks who don't compensate you, etc. You have to be able to have the courage to ask for fair wages. You have to deal with clients who change their specifications constantly and don't want to pay you more for it. I've taken to getting signoffs on the specs with the understanding that changing the specs later will result in extra cost.
This does provide flexibility and more free time, though personally I've had trouble keeping a steady flow of work which has hurt my overall profitability.
I tend to do a lot of long term contracts, and then pick up short term work in between jobs. It's a nice thing to be able to fall back on.
___
It's the end of my comment as I know it and I feel fine.
I have been doing consulting/contracting for nearly five years, and found this book to have some pretty good advice:
/ dedasys-20/
http://www.amazon.com/exec/obidos/ASIN/0471176494
Anyone got some others to recommend?
http://www.welton.it/davidw/
I'm not doing contract programming, but rather, freelance writing. One of my largest clients uses a third party company ("Superior Design International") to pay the bills. Through a variety of excuses, just not responding to emails, and so on, they've managed to underpay by something like $70,000... Curiously, I've talked to the company I'm working for, and from their numbers, it looks like SDI isn't even stealing my money, they're just not bothering to do their job. (Which is to ask their employer for money, take the money, and disburse it.)
FWIW, my lawyer sent them a very friendly letter, and by this time next week, I plan to start blogging about it, at length, if I haven't gotten paid.
My blog: http://www.seebs.net/log/ --- My iPhone/iPad app: http://www.seebs.net/seebsfrac/
Because, as IBM said it, services have higher margins...
I did it for years, until the IRS passed a specific regulation against it. But only for programmers and engineers. Check section 1706 of the IRS code. Many companies follow this law and outsource to another country rather than hire a contractor. You would probably be better off doing it from another country. I just got out of programming after 20 years and went into a different profession.
I made the same mistakes.
You need to more selective with the contracts that you accept. When you are out of work, it is normal to jump at anything, but it can turn out to be a bad idea. You are better off staying home and studying for a new cert to add to your resume.
BTW: monkey can actually pay better than work where you use your human brain. I have made much more setting up POS terminals than configuring a router.
If you go with the W2 companies, you may be able to collect unemployment between jobs.
"I have to work something like 6% overtime or some such garbage before I get paid for it."
You sir, are getting screwed. If you are a contractor, you cannot be in their "management" or on their IT staff. You are not an employee of theirs. Every hour you work should be billable.
Given that, it is your call of course, as to whether you want to risk the position. Me? I bill all hours.
If you're going to be working in the US, a hard-earned lesson for you is to set aside half of your gross income for taxes (including social security, etc.). I spent a year doing consulting work on the side, so my consulting income was only a part of my total income, and made the mistake of not saving enough. I had heard "save half" and didn't believe it, that seemed unrealistically high, so I put aside a third of every paycheck for tax season. Then the day of reckoning - I found out the warnings were correct, and I was quite a bit short on cash. I ended up paying out something in the high forties, percentage-wise, so if I'd saved half my gross I'd have had a little bit left over.
I'd also recommend paying for a decent accountant, and to do so before you begin. Any competent accountant will be willing to run some hypothetical numbers for you and help you estimate what to withhold from your earnings.
Coffee is my drug of choice.
The real joke (on the U.S., that is) is that the U.S. actually spends more per student on education than high-tax places in Europe or high-education places like Japan. Yes, our education system is broken, but more tax money isn't going to fix it.
Two wrongs don't make a right, but three lefts do.
Interesting numbers, but what are you paying annually for health insurance, dental, and vision? (And what vicinity do you live in?)
Be who you are and say what you feel, because those who mind don't matter and those who matter don't mind. - Dr. Seuss
All the other posts make good points about health insurance, taxes, etc. The gist of these, I think, is that contracting is not an easy road to financial riches. To my mind, the biggest benefit to contracting is that you are always aware that you are the only person responsible for your own success, and so you can never let up. This is also true for employees, but I think it's easier to forget this if you have a "permanent" job.
There was a statistically significantly difference in the number of times I got laid as an employee vs. as a contractor. However the longer I was a contractor at any given site, the more likely I was to get laid at employee rates.
I'd appreciate if whoever's leaving a perfectly good, steady, well-paying job for the hopes of making oodles of money (and working 80-hr weeks) would let me know, since I haven't got either....
mark, Unix/Linux developer, sysadmin, cfg mgr
I've been contracting for 18 years now. Boy am I getting old. :-)
My 2 cents:
1. The general rule of thumb is to charge 50-100% more than your salary was.
2. Buying health insurance is going to be a major pain if you are in the US and can't be covered with your spouse's work plan. Plan on spending $600-700/month. Prescription coverage is especially hard to get. (When I started consulting, insurance was $600 PER YEAR!)
3. Think about incorporating, probably as a LLC corporation. Buy Nolo's books on corporate structures and definitely talk to both a lawyer and accountant. Incorporating will help protect your assets if you ever get sued and can also give you more tax deductions.
4. Tax deductions are your friend. Deduct everything your accountant says you can - car (if you travel to a client), health insurance, computers, your cable modem, books, education expenses, etc.
5. You will have to pay both sides of social security taxes in the US. That means 15% of your first $80k in income is immediately gone. You may have to pay medicare, unemployment insurance, local taxes, etc.
6. Unlike what someone else said, I prefer hourly to fixed price contracts. This allows for the client to make changes (they always do) and you get paid for debugging, installers, research, testing, localization, etc. NEVER SIGN A FIXED PRICE CONTRACT WITHOUT A DETAILED, COMPLETED SPECIFICATION. Always try and make a client responsible for testing the software when possible, for liability reasons, acceptability, and because it's very hard for an individual to test software on many different operating systems, hardware configurations, etc.
7. Look for other clients. One client isn't enough. When money gets tight, contractors will be the first to go.
8. Look for other contractors and possibly join forces. Networking is vital.
9. Open a retirement account - definitely a Roth IRA and probably some other kind too (SEP IRA, SARSEP, etc). Your accountant can give you the details.
10. Never sign a contract with someone you don't trust unless they have deep pockets and even then it's probably a bad idea.
11. You are charging a lot of money. Make sure your skills stay ahead of everyone else's. When I started consulting C++ didn't even exist. I've been through new languages, new operating systems, new tools, embedded systems, server software, client software, etc. It's getting impossible to keep up with everything, so you need to predict the future and learn it ahead of time. You *will* make mistakes (I spent a year working on OpenDoc!), but hopefully you will also grab onto something new that will take off (I also spent time with early versions of QuickTime because I knew it was going to be big).
Contracting can be great, but it's definitely not as easy as sitting back and collecting a paycheck.
Why work for fourty hours a week for somebody else when you can work 70 for yourself.
It's hard work... but it can be rewarding.
Robby Russell
PLANET ARGON
Robby on Rails
Say, hypothetically, that Volt pays you $50 an hour, but contracts you out to clients at $75 an hour. Then the Volt overhead would be either 33% or 50%, depending on your point of view.
Anyway, when you use someone like Volt, do you know what their overhead is? I.e. do you know whether you're being ripped off, or whether the overhead is something reasonable [like 7%, or 10%]?
On the other hand, he was also getting 2 weeks' vacation and sick time. Sounds more like a regular ol' employee to me, and assuming so, being offered overtime of any kind in a salaried position is rather unusual in a good way.
It bugs me that there are so many of these "contract" positions that exist solely for the purpose of allowing the employer to save money by not paying the employment taxes and such that are legally due, while not adhering to the letter of the law in allowing the "contractor" the flexibility in hours and work location that they're entitled to.
Please stand clear of the doors, por favor mantenganse alejado de las puertas
If you can do that, you can be a so-so programmer (or any service provider) and you'll still have plenty of inbound work.
"It was a summer's tale: Just a boy, his Linux, and a head full of dreams..."
I thought this type of thing was pretty common. I grew up in Minnesota and we had Canadians come down for heart surgery all the time. I guess given the choice between swallowing your pride by sidestepping the Canadian health care system and "death by waiting list"... well... yeah, let's just say Minnesota hospitals have saved a lot of Canadians' lives. It's a fair trade. We like to buy our prescription drugs from Canada.
Anyhow, I wish your friend the best of luck. Back problems can be totally debilitating.
"Avoid employing unlucky people - throw half of the pile of CVs in the bin without reading them." -- David Brent
One of the benefits of marriage is a wife with benefits.
"Avoid employing unlucky people - throw half of the pile of CVs in the bin without reading them." -- David Brent
The money you are making does seem pretty good. Only one problem, it will never go up. Why? Because your hiring process works like this:
Target Company: I need to rent a pair of hands.
Contract Company: I've got these hands, they can do the job for $100/hour. Then I've got this other pair of hands, they want $120/hour.
Target Company: Um, I'll take the cheap hands, thanks.
It's not that you aren't worth it, it's that your contracting company's job is to offer a stable of people who do an "efficient" job for the target companies. And that means they'll always be stocking people at at entry price, and some will do as well in interviews as you.
So, your career development is somewhat limited. That's a downside next to your full-time coworkers.
All the people I know who have made a lot of money contracting have gone it alone at some point. Then your contract house isn't working against your career advancement.
I'd really recommend specializing/making a name for yourself, and then going it alone at some point. Then you can more easily raise your prices, since companies are hiring you, not your contract house.
http://lkml.org/lkml/2005/8/20/95
Perhaps more importantly, the merits of postponing taxes depend a lot on what you think rates will be like in the future. Bush has both cut tax rates down to an unsustainably low level and built up a huge debt overhang. (He's borrowed about $100k in each of our names, and it's been blown, not invested. Guess who gets to pay it back!) Since we know that we need a government, the debt will have to be brought back into line sooner or later. So, tax rates may well be quite high in the future (unless you're one of the oligarchs). Given that, maybe you should pay your taxes now, while rates are low, rather than delaying them until retirement, when they may be sky-high.
Mike
"Not an actor, but he plays one on TV."
That's nuts. I'm self-employed in Arizona, and pay ~$400.00 a quarter for single-person health insurance. Unless you have reason to expect frequent doctor visits and treatment, or need to cover dependants, you can do quite well with a high deductable and lower annual payments.
NEVER SIGN A FIXED PRICE CONTRACT WITHOUT A DETAILED, COMPLETED SPECIFICATION
Indeed. I learned the hard way that everyone as a different idea what "done", "complete", and "finished" mean. In the best of cases you and the client can amiably resolve differences, but you should always try to be a specific as you possibly can right up front. The goal should be to minimize surprises. The last thing anyone wants to hear is, "But when you said [...], I assumed you meant [...]."
Java is the blue pill
Choose the red pill
You can make a lot more money, but only if you have the business sense to do it. Get a lawyer and make sure that you own your code so you can sell it multiple times. That's how independant contractors make the big bank.
People who think they know everything really piss off those of us that actually do.
Here's another good series of articles on going independent:= 12&d=10
http://angrycoder.com/article.aspx?cid=6&y=2003&m
Flying is easy, just throw yourself at the ground and miss. -Douglas Adams
> That's nuts. I'm self-employed in Arizona, and pay ~$400.00 a quarter for
> single-person health insurance.
Yes, I was thinking married with family. And many medical policies these days don't include things you think should be covered, like visits to a doctor's office. Most kids spend their first two years seeing the doctor constantly and the costs definitely add up.
On the plus side, if you incorporate you can deduct just about ALL medical expenses, even those not covered by insurance. That can cut the cost of medical care by 40-50% depending on your income tax bracket.
Rate me down, motherfuckers. That keeps me in contracts. I think it is funny.
I forget what 8 was for.
I sure do miss them cow-orkers!
.
- aqk
F U
The only thing "better" about contracting is dropping the facade
of job security. The golden handcuffs are gone and both sides
know that it only takes a minute to close up your laptop and
fill your carry out box. Two weeks notice not required, though
with a good rlationship a contractor wil have more notice than that.
One talks to the customer about contract money frequently. You will
know where you stand.
The downside is all the self employment paperwork hassle from the
government who is "here to help you." Between Fed/State/Unemployment/licenses
you will be driven to distracion.
As to working hours there is the odd job where you can be free. But
it is a working day world and the customer expects you to be there
when he is there. No, you don't have to live with the employee manual
but if you are not there when the customer needs you, you may not
be there very long. Very few projects are "team of one."
I've had two nice gigs. One was telework with a customer in another state.
The other was pulling the graveyard shift in a lab of tech company.
The military computer box being developed was too expensive to make
more. For development work the prototype was put to work 24/7 and
the contractor got it all to himself till the sun did rise.
Another perk is to be able to work for different companies
at the same time. It gives you new views and opportunities.
Be sure to fill your retirement accounts as that is all you can count on.
You ain't getting any younger.
OldEngineer
cursethedarkness
I've done both -- worked contract under job shops for a few years 2000-2003, then went freelance starting my own consultancy. Anonymous makes valid points. Job shops typically have a salesperson with some number of accounts into which they are frequently in contact (especially in Q4 when staffing decisions are being made). They also usually have 2 to 4 recruiters working the phones full time. Recruiters talk to potential contract employees whose resumes they've found while scouring job boards like monster and dice. If you read those job boards, most of the positions listed are contract via a job shop with considerably fewer listed by corporations. When talking to a job shop recruiter keep in mind that they spend all day everyday negotiating -- being direct will not hurt their feelings. Unlike regular employers who seek to build a long term staff and cultivate intellectual value through your employment, job-shops have no interest in you beyond placing you and collecting. Consequently, their tactics can be rather cuthroat. In my experience this is not an attempt at win-win negotiation, be forwarned. The job shops do their level best to recruit help for as little as they can negotiate. Keep in mind that they also have a maximum billable rate themselves and they to pay you and their own staff from the differential. Most recruiters and thier sales person are paid on commission which is paid to them only during the first 6-9 months of your employement afterward the jobshop takes the whole cookie. If you can find your own work you will do much better. Start close to home, call former employers and friends. Let them know you're working and available. You have a better chance of getting in, being that you're a known quantity, with former employers than elsewhere. Set your rate below what the jobshop would charge for you and underbid them. You have a leg up with former employers since you already know their processes. In addition, you are now responsible for keeping your client happy. Do your best work for that money - your attitude will separate you from the others. Network, Network, Network and Network with your friends in the field. Keep them aware of your capabilities. Above all, keep yourself squeaky clean with respect to taxes. Work hard for a few quarters and live within your means. Establish yourself and then you can adjust your rate slightly as demand permits. Network network Network - talk to people!! Your best advertising is a satisfied customer. The converse will be true as well. Best regards, Future Expressionist
I remember the following conversation over twenty years ago between a friend of mine from Bell Labs and an older neighbor in the aerospace industry.
Aerospace Neighbor (AN): So, do you work at Bell Labs too?
Bell Labs Friend (LF): Yes, but I'm not a permanent employee, I'm just a temp.
Aerospace Neighbor: Actually we're all just temps, some of us simply refuse to acknowledge it.
For many years, I didn't realize how true that was.
[Insert pithy quote here]
Fixed bid contracts *do* work well when the work is very specifically defined, but I find that the customer that understands what they want that well is pretty rare.
I'd prefer fixed bid contracts myself but as you say you need to have it clearly stated in the contract the who, what, and when. The deliverable has to be specific and you can't allow mission or scope creep.
FalconShould there be a Law?
I took a look at my recent medical needs, did some rough math on the raw costs of doctor visits, weighed that against various plans and deductibles, and pretty much went for the far end. A fair amount comes out fo pocket, but over all I'm good. And currently healthy.
I would encourage anyone you has not yet acquired (or has since shucked) too many obligations to strike out on your own while the risks and costs are still low. You may find that it isn't your cup of tea, but the longer you wait the harder it gets, and you risk kicking yourself in the ass later on in life, always wondering, "What if ... ?"
Java is the blue pill
Choose the red pill
I was a contractor also but really found it hard to list every assignment on my resume for i would have jobs to list doing short-term jobs. I have a permanent gig now and it's good to have insurance for medical benefits and good to have life insurance to take care of the burial. (For those who don't have a prepaid plan.) For those people was contract on a regular basis, can you tell how to list the multiple jobs on your resume without it becoming a short novel?
Information on this amendment (scroll down about 2/3's of the way)
Anyhow - it seems that the parent poster is right, to a degree. It isn't "illegal" per-se, but rather it is cheaper for a company to outsource than to hire a contractor in a "technical" profession...
Basically, Section 1706 amends Section 530 of the Revenue Act of 1978. Section 530 allowed employers to treat contractors as non-employees without incurring a tax liability. Section 1706 amends this by saying that this section "shall not apply to firms engaging the services of such person as an engineer, designer, drafter, computer programmer, systems analyst, or other similarly skilled worker engaged in a similar line of work". So now, according to IRS code, if a company hires you as a contracted programmer, the employer incurs a tax liability. Thus, it becomes cheaper to outsource (no tax liabilities under this section), than to hire a contractor.
Note that this doesn't make contracting illegal, it just makes it more financially difficult for the employer. If the employer thinks he will get a better deal from the contractor than from outsourcing (or another method), and is willing to pay the taxes, he can still hire you as a contractor. Even so, I find this code amendment to be a funny thing, and I tend to wonder what/who got it to pass - ie, WHO SCREWED US?
Reason is the Path to God - Anon
As a regular employee I have worked up to 21 hour days and 105+ hours per week. I have had my badge access removed by my manager in order to get me to rest over a holiday. Of course, I was gungho and did it to myself. Contracting definately keeps my hours in line because overtime must be approved. :-)
dortmann31415@yahoo.com
I'm brand new to the world of contract IT work (I previously lived in smaller cities). I recently moved near Detroit, and I was amazed to see the amount of contract IT work that is being done. I'm always extremely nervous when it comes to contract work, and I've only done about 3 months worth on a temporary basis. Then again, I'm quite unhappy with my current permanent job, but I'm still too scared to go hire on with a contract agency, I just don't feel it is as steady as a permanent job.
What I want to know is what is everybody's secret in keeping that steady income? Do you generally work and contract yourself out, or do you go through a contract-house? I'm extremely nervous about working for 6 months, only to have to do more searching for contract work in that 6 months, then I worry about not being able to find something that pays as well. How do you guys deal with the irregular pay?
YOU'RE WINNER !
Another lame blog
Then you can go freelance, get paid more and work *less* hours :)