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The Coming Tech Gig Economy (infoworld.com)
snydeq writes: The rise of contract and contingent work is shaking up the traditional IT career path, with the days of decades-long careers in corporate environments dwindling for many IT pros. "And it's not only nonstop cost cutting that has businesses favoring IT contractors they can bring on — or scale back — as necessary without paying benefits. Emerging platforms, in particular around the cloud, have many organizations shifting their staffing models toward project-based, contingent work in hopes of landing the key skills necessary for their businesses to stay competitive in a constantly evolving technical landscape. ... How should you adjust to this shifting employment landscape? Should you broaden your skills or specialize? Should you develop a plan to strike out on your own or double-down on the skills that will remain invaluable for retaining long-term, full-time employment?'
Best advice...get your first jobs out of school. Work, network....make business contacts and friends, and hone your skills to become marketable.
While doing this, incorporate yourself. This will prepare you for contract work when you are ready. Remember all those business contacts and all? Well, those will help lead you into contract jobs or even direct ones as you move from job to job.
But if doing contracting...INCORPORATE yourself. Learn to budget and plan. You have to save money while making it, for the down times...and retirement.
But for all that extra effort, there *IS* benefits. You are your own boss. You get to call the hours you work. And you can write off a shit ton of stuff perfectly legally...write those expenses off. And eventually, get a CPA to help guide you.
There are many ways to do it, I prefer the S-Corp method.
With this, yes there is more paperwork (CPA helps here, and their fees are reasonable and deductible)....but you can keep more of your hard earned money.
It can work like this. Let's say for simplicity...you bill $100K a year.
With the S-corp, you pay yourself a "reasonable" salary....the IRS is vague on this, but let's be reasonable and say you pay yourself a salary of say, $40K. Now, on that $40K, you pay out of that SS and medicare, employer and employee....and your state and fed taxes (if you state taxes you).
The rest of the $60K...at EOY, falls through to your personal taxes (assuming single person business)...now, take all your deductions from that....and what's left, is only taxed for state and federal....you save the SS and medicare taxation this way.
What's left is all yours.
100% perfectly legal, and if you just keep records...and play by the rules, you can save enough money to keep things worth the effort.
Also, don't forget, you have your own insurance. That's no biggie, especially if getting into this young. Get yourself a "high deductible" insurance policy, which today is I believe $1500 (I don't have my files handy right now for exact numbers)...with this, you can open a HSA (Health Savings Account) into which you can sock away $3500 pre-tax, which also decreases your taxable income. Out of the HSA, you pay your routine meds...Dr. visits, optical, dentist...etc.
The nice thing about a HSA..is that it is NOT use or lose like a FSA (Flexible Savings Acct. offered with some W2 jobs)....with HSA, any leftovers can be rolled over year after year. You can even invest monies in an HSA..and eventually excess can become retirement $$ for you.
So, yes, you have to be responsible.
Yes, you have to manage your money.
Yes, you have to learn your worth and learn to NEGOTIATE...so that you can cover your expenses, money needed for retirement and insurance, and vacation time off. But this isn't rocket science, you just need to learn to become an adult and take care of yourself and learn how to protect your interests.
One last piece of advice....if you are an American citizen, try to get into Federal Contracting...you can do LONG multi-year contracts that offer much more stability. If you can make sure not to have a lot of skull bong moment pictures of yourself on social media while growing up, you can pretty readily get a clearance....and then, you are really SET for profitable, long term money making with at least as much stability as today's W2 worker.
Yes, the days of steady employment and loyalty from a company have been LONG over...if you're gonna get treated like a contractor and not have any more stability than a contractor...you might as well get the BILL RATE as a contractor to make it all worth while.
That and you can save more of your hard earned tax $$'s this way too.
Light travels faster than sound. This is why some people appear bright until you hear them speak.........
The days of a lifetime job at one company have been over for at least 3 decades really.
The days of a "lifetime job" NEVER happened. It is a myth. Average job tenure is higher today that it has ever been in the past. Sure, back in the 1960s, there were some people that worked at the same company for 40 years, but not as many as you may think, and there were a lot more that did day work and odd jobs.