The Hidden Costs of Going Freelance

snydeq writes: IT pros lend firsthand advice on the challenges of going solo in Bob Violino's report on the hidden costs of going freelance in IT. 'The life of an independent IT contractor sounds attractive enough: the freedom to choose clients, the freedom to set your schedule, and the freedom to set your pay rate while banging out code on the beach. But all of this freedom comes at a cost. Sure, heady times for some skill sets may make IT freelancing a seller's market, but striking out on your own comes with hurdles. The more you're aware of the challenges and what you need to do to address them, the better your chance of success as an IT freelancer.'

Comments

Re:60% tax

[aaarrrgggh]

You can pay a lot of taxes, but (in the US at least) you can do a solo-401k retirement plan, which will let you save $37k with zero taxes and $17k with just 15%. You can also deduct expenses, and if you are creative with your business structure you can avoid some other taxes.

Mostly FUD: Film at 11

[CaptainOfSpray]

Yes, those things listed in TFA are important but they are not that difficult to handle. The worst thing about TFA is that it mostly does not offer the obvious solutions.
1. Getting to work remotely is straightforward. Don't ask for it till you have done an onsite contract first. Prove that you deliver. Then you can be trusted.
2. NDA. Yes, insist on the "standard exceptions" or walk away. There are plenty of other fish in the sea.
3. Yes, you have to educate people you work with. Also true when an employee.
4. Riding out storms. It's not hard to build up reserve money in your business - simply park some of the profit. I always had 6 months worth. You have to park quite a lot anyway, so that you have it ready when tax payment day comes.
5. Keeping up to date. Yes, that's tricky - but you do NOT need to chase the Flavour-of-the-Month like employees do. I only needed to change direction once in 20 years - plenty of earning opportunities always there
6. Reconcile agile and fixed-bid? That's ridiculous FUD. No freelancer is so stupid they do fixed-bid with open-ended requirements, surely? Leastways they only do it once. Every freelancer I have ever worked with was on time and materials.
7. Communications gaps. This is not a threat, this is an opportunity! This is where the freelancer can shine, by doing the internal communicating that the customer is themselves is incapable of. I have done this on every project, and got kudos for being helpful.
8. Time management. Ho hum. Everybody, freelancer or employee, has to manage their time.

Time needed for handling getting requirements and doing proposals? You call that non-billable? No, Dorothy, you roll that into your daily rate.

Re:The life of the IT contractor

[plopez]

You probably did not see the movie. In fact, if I had a dollar for every time I chased after a car driven by mad scientist with aliens in the trunk, I'd probably have 3 dollars.