Contract/ Consulting Job Advice?

Jesse Squire

Unless I remember incorrectly from my (limited) consulting experience, if the position is 1099, you'll be responsible for handling your own taxes. --Jesse

BrockVnm

I kind of went through this about 6 months ago. It was little different. I was working as a UNIX sys admin and I just hated the company I worked for. The management was horrible and treated everyone so bad. I also was looking for a developer’s job since I graduated college (about 2 years). I got offered a consultant job (no time frame) that could possibly turn into a full time position. I also get paid about 3 times what I made before, close to the rate that you got offered. I got myself an accountant (the same one my wife’s company uses. The owner of the company she works for is a family friend). The account has me put about 30% of my money away for taxes. I am on my wife’s insurance. I have my own IRA from my previous job. I am working as a Java developer (its not C++) but I love it. I love doing development and my wife says I have never been happier. They are already talking about bringing me on full-time but I am not sure if I want to because the consultanting job is great...(something I have to think about in the future). The company I work for is awesome and my group is really cool. I am not sure if you know much about the company but if you know any employees I would advise asking them about the company. As I came here about half the developers (and some management I work under) started as consultants. For me it was the best business decision I ever made. I work about 50 hours a week and the commute is about 1 hour (a train and ferry into NYC from jersey). So my personal projects have taken a big hit but I am learning so much here and am happy. When I was trying to figure out what I wanted to do I kept thinking about the worst-case scenario. I asked allot of friends what I should do. I even posted here on code project :) A got allot of advice, some say yes and some said no. I spent allot of timing thinking about the worst. A friend of mine put it to me in a good way. He said would you be willing to work anywhere if the consultant contract was over? Another friend told me "high risk = high reward." I guess you have to do what you think is best for you and your family. I hope this helps; it’s just my experience. Good luck with whatever you decide!

There are 10 kinds of people in this world. Those who understand binary and those who don't. We shouldn't assume something's debugged just because everyone in the whole world has access to the source code.

prcarp

If it is a 1099, you will be responsible for taxes. I do some C/C++/VB moonlighting in VA and I am ballparking 1/3 will go to taxes (and therefore 1/3 is saved away) - a lot will depend on your financial situation though. I would also recommend getting an EID (Employer Identification) number from the IRS as a "sole-owner proprietorship". It's free, easy (done online), and your prospective company issues your 1099 through that. Then, if you work at home, some things may be deductible on your taxes (dedicated computer for the job, developer tools, an ISP connection, etc.). I *highly* recommend talking to accountant before doing anything like that so red flags aren't raised with the IRS. Also, $60/hr is slightly below average, especially in the DC area. Depends on how hungry you are. $60/hr is cheap from a company standpoint - they don't have to pay for your benefits (health & 401k), the roof over your head, desk space, computer, phone, electricity, etc.. If you're on your own, you definately want to investigate what health insurance is going to cost you. It will eat up a lot of that $60 (after taxes). You may end up with $15/hour all said and done! Hope this helps. Good luck!

David Crow

Steve Maier wrote: Keep in mind that alot of people live by their means...that means that if you make more you will alsospend more. True, very true!

"Opinions are neither right nor wrong. I cannot change your opinion. I can, however, change what influences your opinion." - David Crow

Justin Cooke

Thanks for the detailed info, prcarp. My main concern is trying to figure out what the "catch" is. It seems that the major cut will be ~1/3 for taxes. Even so, I'd still be earning more than twice what I make now. Can't hurt to interview and learn a bit more!

Justin Cooke

I know what you mean. In fact, my wife has already warned me about that :)

Matt Gerrans

I wouldn't worry about the insecurity -- if you do a great job, they'll want you back, either for enhancements or new projects. I've never had a contract that was not extended (some for many years with many projects). On the flip side, when you are a "permanent" employee, there is also no guarantee there won't be a layoff in your future. However, you should do all the math and consider factors like paying for your own health insurance and social security, among other things. Matt Gerrans

Justin Cooke

Thanks, BrockVnm. I understand that there's some risk in it. Is that the only reason the rate is so much higher? I'm not really worried about quitting my current job and then possibly needing to find another if the contract work ended. I've already got offers much closer to home (in Baltimore), so I don't think it'd be hard to get a job later. Of course, they pay around what I'm making now. I'm just thinking I could take this contract job for a short time and get a good financial/job satisfaction boost. Thanks again, Justin

prcarp

Or, treat it as a "try before you buy" situation.... Stay with your current job and try this gig out on the side. It might be crazy hours (or even impossible) but there would be two benefits: 1) You keep your current company's benefits (health, 401k, etc.) That may be significant. That means you pocket a bigger slice of the $60/hr. 2) The contract work may look great now but once you're in it, the grass may not be greener like you thought. Your current job remains your safety net if the contract work sucks. I am actually doing that now and the contract work is turning out great. It is a start-up company that I wasn't sure was going to have long term potential.

Vivi Chellappa

So let us say you have an annual income of $120 K. You need to figure Federal income tax (35%, I think), state income tax (as high as 8% in some states but more likely in the range of 5%), Social Security taxes (as a self-employed person, you pay BOTH the employee's as well as the employer's portion adding up to about 12%). Now, consider health insurance. It might cost $300 a month for you and your family. I think you will be lucky to net $55,000. Not a major jump from $42,000 when you consider the risk of getting unemployed on a moment's notice. But is is a question of how risk-averse you are. On the plus side, you can put away about 15% in a Simplified Employee Pension (SEP) plan or a Keough plan for your retirement. That would be $18,000. After about 30 years, that could turn into a nice chunk of change. Just my two cents.