David R. Heffelfinger

  Ensode Technology, LLC

 
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So you want to become an independent consultant?


I have been an independent consultant for almost 7 years. Last month I had the opportunity to speak at the JavaOne conference, I identified myself as an independent consultant, after my talks a few attendees approached me to ask how to go about becoming one.

The other day a former coworker found my LinkedIn profile, saw that I'm independent now and gave me a call asking for advice and guidance on going on his own.

Since there seems to be a lot of interest in finding out how to strike it out on your own, I'll write down about my experiences here, then in the future direct people to this blog post.

The first thing I'd like to clarify is that I live in an area where most software development work is contract work anyway. Another thing that I'd like to point out is that by the time I decided to go out on my own I was already a published author, that fact helped me market my services and obtain work fairly easily. Your mileage, as they say, may vary.

When doing contract work, there are three ways to go about it.

W2, 1099 or C2C?

When hired as a W2, you become a temporary employee of the company hiring you. The client (your temporary employer) takes care of your tax deductions. There are also 1099 contracts, in which the company hires you as an individual, but you are not their employee, you are responsible for deducting your own taxes. The third way to do it is a Corp to Corp contract, commonly abbreviated as C2C. When doing C2C contracts, you need to incorporate a company, in this case the clients hires your company, not you directly.

Before I incorporated Ensode Technology, LLC, I was doing a lot of W2 contracts, since like I mentioned before the majority of software development work in my area is contract work . W2 contracts usually lasts from 6 months to a year, in rare occasions it can go beyond that. Since I had no job security anyway I figured that I may as well go all the way, start my own company and incorporate.

How do I incorporate my own company?

Incorporating a company is very easy. First come up with a name, google it to make sure it is not taken (by the way Ensode stands for Enterprise Software Development). I incorporated Ensode Technology online and didn't even had to get up from my seat, if I remember correctly it cost me about $100 USD.

Getting a Business Bank Account

You need to get a business bank account primarily so that you can get paid. Your clients will be writing checks to your company, not to you personally. Any bank will be more than happy to help you open an account with them.

Getting Insurance

After incorporating, the next step was to get insurance, a lot of clients won't do business with you unless you are insured. I have liability insurance covering up to $1,000,000, it costs me about $500 a year.

Taking care of tax deductions

Lastly, I hired a payroll service to take care of my tax deductions, that sets me back around $85 USD a month or so.

Once you have incorporated your company, gotten liability insurance and hired a payroll service (this third step is optional, but I highly recommend it), you are ready to strike it out on your own, so the next question get asked a lot is:

How do you get projects?

When your company has only one employee, getting contracts is not much different from the way most other people find regular jobs. You post your resume on a job board, and wait for companies to contact you, once you start talking about a potential job, you should let them know that you are only looking for C2C contracts.

So there you have it, as you can see striking it out on your own is not really that hard. Good luck in your new venture.

 
 
 
 
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© David R. Heffelfinger