Where can I learn the in's and out's of Independent Contracting?

June 3, 2006 5:02 PM

Are there any good websites with information about being an independent contractor? Google is failing me.

I'm looking for the sort of site that would be titled "Independent Contractor Resource" or something like that. A place that could answer questions like "What % of my pay would end up being paid as taxes?", "What can I write off and what can't I?", "What can expect from my employer (or whatever they're called) as a Independent Contractor?" etc... I've been in touch with a number of companies who want to offer me contractor positions (In the hugely general field of Computer Science), but I'm young, fresh out of college, and don't have a lot of experience, I'm not sure what I should charge per hour, and how much of that I'll end up being able to keep at the end of the day. I'm not sure what the laws and regulations are, or where to find them. Can somebody point me in the right direction? In a perfect world I'd like a well maintained website that includes an active forum where I can ask any questions that I can't find the answers to...

posted by youthenrage to work & money (7 comments total)

I don't have any specfic site suggestions, but I do have three pieces of advice:

* Regarding taxes, the smartest thing to do is to sock away 1/3 of every check you get as a freelancer and not touch it during the year, except to make your quarterly estimated payments. Yes, it's more than you'll probably end up paying, but it forces you to have a cushion, and gives you a resource on which to draw if you want to make any big capital purchases at the end of the year to write off on your taxes.

* As for an hourly rate, it really depends on the specific work you're doing, and to a lesser extent, for whom. Most professions that contract have some sort of networking groups. Find yours, meet your peers, and find out the market rate.

* It's okay to give a break on your rate to people you a) really want to work with, or b) really need your services and have a legitimate reason for small budgets (like some non-profits). But generally speaking, it's a bad idea to work with people who don't want to pay you what you're worth. The client who asks you to lower your rate is the same client who's going to haggle with you to adjust your invoice, take forever to pay, and generally be a pain in the ass to work with.

I hope that helps...
posted by j-dawg at 5:19 PM on June 3, 2006

I've always found Nolo's articles on the subject useful.
posted by medpt at 8:31 PM on June 3, 2006

My (fairly new and still ugly) blog covers independent consulting, which is similar to independent contracting. If you want me to cover something that isn't listed there, just let me know. I've been consulting for about 10 years and I'm happy to share what I've learned. Link in profile.

Do check that you are legitimately a "contractor" and that the company is not simply trying to avoid taxes by calling you one.
posted by acoutu at 8:51 PM on June 3, 2006

Steve Friedl has great advice, which I found via this slashdot thread. Just one article (maybe I couple of others, but most of his stuff is technical). It is business practice oriented, rather than accounting..

Arstechnica's openforum: The Boardroom might be good, but it is not specifically about consulting.

I'd think there should be some dedicated consulting forums too..
posted by Chuckles at 9:02 PM on June 3, 2006

I have used RealRates to check what going rates are. You can search by skill set, location, and more, but there aren't as many data points as I would like. The gal who runs the web site also has written some books, my favorite of which is "Answers for Computer Contractors." I highly recommend you at least read that one. You can buy the books from the site.

I did contracting/consulting for many years and am happy to answer any questions you have (email in profile). The biggest mistake most people make in the beginning is underpricing themselves.
posted by Sorcia at 10:49 PM on June 3, 2006

And here is a forum.
posted by Sorcia at 10:52 PM on June 3, 2006

I have been an independent contractor in the IT world, on and off, for the last twenty years; although I have a staff job now, my most recent stint as an indy was from 2000-2004.

For advice on how to price your services, see if there's a chapter of the relevant professional association in your warea, and network your butt off. (As a tech writer, the most valuable information I ever got out of STC meetings was extracted from the informal discussions of markets and rates that went on after the meetings, over coffee or beer.)

In terms of tax planning and financial stuff in general: find an accountant in your town who works with small businesses and independent contractors, and pay for an hour or two of his or her time.

A good accountant is a complete godsend in a situation like this, and even if the time costs a couple of hundred bucks, it'll be the best investment you ever made. Said accountant will be *completely* familiar with both Federal and state/local laws on taxation that apply to you, can advise you on how to keep records and set up billing, can tell you what's deductible and what isn't, can help you assess whether to work as a sole proprietor or incorporate as an S-corporation or organize as an LLC, and so on and so on...

Much/most of this is highly specialized knowledge; you *could* learn enough to make all these decisions yourself, but I think this is precisely the kind of thing experts like accountants and attorneys were invented for.

E-mail is in profile if you want to talk. Good luck!
posted by enrevanche at 4:24 AM on June 4, 2006