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:IT workers shouldn't freelance

[AK Marc]

And I've had programmers take down a 1000+ user network by "testing" by turning on a test network, where it mimicked the real environment, down to the IP addresses and such. Of course, they didn't tell anyone else in IT what they were doing, and they had admin access to the networking gear because the CIO was ex-programmer and programmers are the best IT workers.

Of course, when the calls were rolling in that the network was down, I got in trouble for unplugging their test gear. Programmers are best when contractors. They roll in, give you buggy code, and wander off. You don't have to keep them on the payroll.

Re:The painful truth about freelancing

[Anonymous Coward]

I agree. I have done some freelancing (because I had no other job).

1) There is hard competition. There is always some guy from india or china (or africa) who offers to do the job for 5 USD/hour or less - and have PhD + work experience in that particular field and his costs of living are much lower than yours.
2) It is very difficult to get enough money for living. You might get some good deals but in practice there are times when you cannot get no work so I hope you have a house and some savings or otherwise you will end-up living on the streets.
3) If you become ill then you have no income at all.
4) You waste time writing business proposals and other material which takes time and you never get paid.
5) Lots of work is done without paying the taxes (it is often even so complicated if your money flows are from multiple different countries and you contribute with some other guy from other country and pay him something etc). However, the amount of money is often so small that many authorities don't even bother to track you down.
6) Yes. You can do it while you are unemployed. At least in some european countries you are allowed to work to get very small amount of money (thought you in theory work as a contractor) and at the same time be unemployed (they do rarely check these) - but if you get caught you might lose all your umemployment benefits. Also it might work if you are a student and want to get some part-time work while studying.
7) If your past customer wants to sue you for some reason, you better have money to pay for lawyers. It might become interesting if you get sued and transferred to another country (if theory you might even get criminal charges if you do something very stupid like try to sell your customers private information to somebody).
8) Projects change all the time which might be "interesting" but is very demanding. You have constantly learn new things and cannot fully specialize into anything.
9) It is yet another way to destroy labour law benefits and unions in europe - you beg for some shot-term projects and the pay is often minimal.

=> People do it because they might get some money and they cannot get any other job.

Plus sides:
1) You get some work experience which might help you to get a "real" job.
2) If you are able to get good clients/contacts, you can maybe have a reliable source of income.

Re:60% tax

[tompaulco]

You automatically rank in the highest tax category as a freelancer. Of every buck you make, 60 cents go to the state.

You are automatically in whatever income bracket your income qualifies you for, just like anybody else.

You have to keep your own pension in mind, and let us face it, most programmers are not that good at selling themselves. While exceptions are there, once you start as a freelancer, you might start to appreciate those pesky sales droids a lot more.

Pension? BWAHAHAHA. Oh, thank goodness the company has my back. Yeah, right! These days, when you work at a company, you ARE an independent contractor. There is no pension. There is no retirement unless you are paying into it yourself (and they might match you for a few percent). As soon as they can find somebody that they think can do your job for a nickel cheaper, you are out the door. There is no loyalty from the company, but if you aren't loyal to the company and not willing to work 12 to 16 hour days every day, then you are "unprofessional". If you don't give two weeks notice, you are "unprofessional". But they can walk you out the door at a moment's notice, and that is supposed to be okay.