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So You Want to be A Freelancer

samuelmullen.com

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Re: So You Want to be A Freelancer

#51

Post by majc2 »

boothead wrote: post #25
ambuj wrote: post #23

Earlier quoted context omitted.

I have been contracting for about 8 years now and yes, it is quite easy to get started in the UK. You can find your own contracts or most likely you'll need to send your CV to head-hunters looking for contractors. Once you get a contract, you've got two options: a) setup a limited company to invoice your client/agency. Many accountants in the market that can help you with that. e.g http://www.sjdaccountancy.com/ or b…

Agree except for recommending SJD. They are a good accountancy firm but when I was with them they would only do my accounts through a really horrid excel spreadsheet. This time round I've gone with http://www.nimblejackaccounting.co.uk/ who bundle an account with freeagent (which is probably the best contractor accounting package out there) AND the set up of your limited company in their monthly fee. If you're going…

Got to agree, umbrellas are a waste of money. Freeagent is really good (one or two small annoyances, but nothing that matters). They have a list of partner accountants who are freeagent friendly; I went for a local accountant who is a one person shop. A contracting friend of mine suggested local over chain. I met with the accountant and I'm really happy with her advice and charging structure; she help me organise starting the business reg for VAT, CORP tax and do some cashflow projections to minimise tax etc. I don't pay anything to her month to month but she is available to deal with any ad-hoc queries and will do the tax return at the end of the year. Freeagent allows my wife to do the bookkeeping, payroll and invoicing without the monthly involvement of an accountannt, then the accountant can get involved at the year end.

Re: So You Want to be A Freelancer

#52

Post by [deleted] »

jdminhbg wrote: post #45
sadkingbilly wrote: post #42

Earlier quoted context omitted.

This is exactly why I had to stop contracting, once children came along. No US health care. Paying out of pocket was $1200+/month for a family plan. It was worth it to take a perm job paying half the rate just to have health insurance.

> Paying out of pocket was $1200+/month for a family plan. It was worth it to take a perm job paying half the rate just to have health insurance. 0.5 * Previously Monthly Revenue so... Previously Monthly Revenue so... Current Job <= $1200/month + Health Insurance?

[deleted]

Re: So You Want to be A Freelancer

#53

Post by swamp40 »

mokkol wrote: post #46
bdunn wrote: post #37

Earlier quoted context omitted.

You mentioned "family", so I'm going to assume you're married. At least here in Virginia (I'm no insurance expert), a group is 2 or more people. My wife is officially a shareholder of my company, and so she and I have a group policy. We pay a little under $1000/mo to insure the two of us and our two girls.

you seriously pay 1000 dollars every month just for insurance??? Im so happy i'm not an american right now....

I pay $1500/mo for family coverage.

The small company I work for offers group insurance, but we all have to pay full price - they don't subsidize any of it.

They do take it out of our paychecks pre-tax so we don't have to pay taxes on it - but it would be tax deductible anyways at the end of the year.

Re: So You Want to be A Freelancer

#54

Post by MrFoof »

Kurtz79 wrote: post #28
davedx wrote: post #9

Taking your annual salary and dividing by 1000 could be a sure fire way to sell yourself short and pick up terrible clients. I would suggest instead to look at what the better freelancers charge (in the US, somewhere in the 50-100 USD range) and figure out where you fit in that based on your skills, experience, portfolio and available work.

Um, wouldn't 50-100 USD per hour correspond more or less to an average annual salary divided by 1000 ? I assume the annual salary is already a good summary of what an employer is willing to pay you based on your area,skill and experience, and the "divide by 1000" is just a rule of thumb to translate it to your rate.

>Um, wouldn't 50-100 USD per hour correspond more or less to an average annual salary divided by 1000 ?

Why would I take on all this extra responsibility and risk to make exactly what I did before (or worse, just the median) when I didn't have to?

There are two reasons why I went independent: The first is because I would be able to take off huge chunks of time for side projects. The second is I would make at least twice as much as I used to (after taxes, insurance, etc.) despite taking off huge chunks of time for side projects.

Also, you cannot expect 50 weeks a year of utilization. If you're smart, you assume 35 weeks a year, and price yourself with that in mind. If you have higher utilization, you have a good year. If you don't, you have no worries.

Moreover, I'm at a client now where I gave them a "fill my rolodex rate", which I was very hesitant of doing. We're tying up after the initial term, because the reason why they couldn't afford me is they have mostly systemic organizational and fundamental business issues than they do technology issues.

Re: So You Want to be A Freelancer

#55

Post by mathattack »

The dollar conversion is very important. I used to work with some people who made $800/day as independent consultants. Some full time employees making north of $100K were livid, and complained about being exploited. The complexities of, "Withhold taxes, pay both sides of social security, pay your own 401K and health care, pay for your own training, and don't even think of multiplying the daily rate times 260" just didn't sink in.

Re: So You Want to be A Freelancer

#56

Post by alok-g »

swamp40 wrote: post #8

Anyone have advice on how to handle health insurance for a family? I've always been worried that once you stray from the protections offered in a group plan, the insurance will just dump you if you have any major issues. And then once you're dumped it's a "pre-existing condition" and now no one will cover it but a group plan - forcing you to join a company again.

I went through this only recently, so do not know for sure if it would save me money or end up costing more.

My last employer was paying about $1.7K per month for a family of three. Costlier than usual because it was a very good plan. I could not find a with similar levels of coverage and deductibles for cheaper outside.

The key thing that varies between plans (I am based in California) include deductible and coinsurance, which can be traded off with monthly premiums. Lower the former two, the higher the premium.

I pulled out my families older insurance claims data when my employer was paying to estimate my future expenses for each family member. Based on that, I considered various plans and ended up choosing a plan with higher deductibles but lower monthly premium (~$600 for the family). Mostly likely, this will save me a lot over the low deductible plans. This is true even when I expect to be paying just about as much in deductibles/coinsurance per month on an average based on the past data. If things go wrong, I may end up paying a lot more, but still capped by the out-of-pocket maximum that is not much higher than $1.7K per month.

Re: So You Want to be A Freelancer

#57

Post by tptacek »

So my freelancing business that I started with 2 friends in 2005 is about to put me and ~20 of my Chicago coworkers onto a chartered bus to Three Floyds Brewery for the day and I'm a little pressed for time, but let me get a few things out really quickly and maybe someone on HN can flesh out my bullets to links to any of the 200 1000-word posts I've written about them:

* Your bill rate isn't correlated with your salary

* Any bottom-up bill rate you back out of your salary is likely to end up with you undercharging

* Bill weekly or daily, but never hourly, never hourly, never hourly; you are not a furniture mover

* Don't rely on rules of thumb for accounting; find an accountant (get them referred to you) as soon as you're reliably making money

* Part of the point of running a freelancing business is to have your eyes out for opportunities to bring junior people on to your team; read Patrick McKenzie's most recent piece about "productizing" consultancies to see one way to do that. Consulting companies don't scale to VC-palatable multiples, but they do pretty nicely for a couple founders, and they tend to pay their teams well.

If you're in a full-time job now and have never tried consulting/freelancing, and you're the kind of person who thinks about one day starting a company, I emphatically urge you to hang up your shingle and start a consulting business. If you're the kind of person who will do well in entrepreneurship, and you can handle 50% more job stress than you have now, you'll make more money consulting and learn an amazing amount about running a business.

Re: So You Want to be A Freelancer

#58

Post by Wilya »

The average yearly rate divided by 1000 doesn't give me a very high number at all. Maybe it's because I'm in Europe, and salaries are much lower here.

Diving it by 100 and taking the result as a daily rate seems a bit more reasonable (and billing by the day is a better idea anyway), but is still on the low side.

Once you factor in 50% taxes, you have to bill 200 days a year to get the same income as before.

On top of that, I plan for 40% of time spent doing billable stuff, and 60% of client search, marketing, networking, and general business handling.

Once you take all that into account, freelancing suddenly becomes less attractive.

Re: So You Want to be A Freelancer

#59

Post by jdminhbg »

Wilya wrote: post #58

The average yearly rate divided by 1000 doesn't give me a very high number at all. Maybe it's because I'm in Europe, and salaries are much lower here. Diving it by 100 and taking the result as a daily rate seems a bit more reasonable (and billing by the day is a better idea anyway), but is still on the low side. Once you factor in 50% taxes, you have to bill 200 days a year to get the same income as before. On top of…

> On top of that, I plan for 40% of time spent doing billable stuff, and 60% of client search, marketing, networking, and general business handling.

Prospective freelancers are often warned that they won't be billing 40+ hrs a week because of ancillary non-billable tasks you have to handle, but this is vast overestimate.

Re: So You Want to be A Freelancer

#60

Post by danielweber »

bdunn wrote: post #35
zdw wrote: post #21

Anyone charging less than $100/hr is probably underselling themselves. The only time you should charge less than that is on very long term contracts with hundreds or thousands of hours, and then, only hesitantly. People make assumptions based on what you charge - frankly, I've found that people tended to blow me off when I charged much less than this, and actually listen when they know they're paying a decent amount…

When we link freelancing rates with salaries, we can easily get led astray by: "OMG $200 an hour — that's like $400k a year full-time! That's insane!" If you're looking to augment staff as a contractor, whoever hires you is going to want to compare your hourly rate with what they're paying their team — so it's going to be tricky to break through that ceiling. But if you're working with clients who have problems to so…

"OMG $200 an hour — that's like $400k a year full-time! That's insane!"

I had a recruiter try this with me. The rates were much lower (I'm not in a top 5 market), but he still tried to convert it into an annual rate.

I think I was being negged so I would lower my rates and they could more easily make the sale.

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