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People tend to think I have a dream job, when I tell them I don't go to the office. I will tell you a story about working from home, being a remotee and not having a regular job. Welcome to the world of contracting and freelancing!
Terminology
Definitions taken from Wikipedia:
An employee contributes labor and expertise to an endeavor of an employer and is usually hired to perform specific duties which are packaged into a job. In most modern economies, the term "employee" refers to a specific defined relationship between an individual and a corporation, which differs from those of customer or client.
An independent contractor is a natural person, business, or corporation that provides goods or services to another entity under terms specified in a contract or within a verbal agreement.
A freelancer is somebody who is self-employed and is not committed to a particular employer long term. For the purpose of this article this is more or less the same as independent contractor but for a short-term project.
Most important of all is that a contractor or freelancer is a separate entity from the organization they work for.
How I became a contractor
5+ years ago I was an employee for Red Hat in Czech Republic, but didn't want to permanently live there for many reasons. During my time abroad I was a frequent traveler. I became comfortable working on the go and quite often my bosses didn't know where I was. Most importantly I made sure that location didn't matter!
After 1.5 years I left the company with an option to continue working for Red Hat Switzerland as a contractor. This is how I started working from home.
The dark side
Many people think working from home is easy. Many think being a contractor is better than being an employee. Many think being away from the office means you will work less. Many think you will make more money. Most people are wrong!
I will highlight the bad side of being a contractor before exposing you to the goodies. Read the next parts before even thinking to quit your job.
Payment
Contracting or freelancing is much more different than having a regular job. If you are lucky you will have a long-term project and have a somewhat regular income. On the other hand freelancing is usually the term used when working on smaller short-term projects. They are irregular, so is your income.
You need to plan in advance your expenses and make sure your income will cover them. This is a lot easier with long-term projects.
Also have in mind that contracts and projects can be delayed, terminated and postponed relatively easy on behalf of the customer and there isn't much you can do. At best they have already paid you for the job done until now and you are out looking for the next customer.
Longer-term contracts I've been working on had the option to terminate without any explanation given in two to four weeks. This is a risk you have to accept and have a contingency plan if your income depends on a single long-term project.
You either get paid by the hour or a lump sum on predefined milestone (e.g. half before, half after delivery). Either way you trade time for money which isn't optimal (same thing do employees btw). The best thing you can do is become an expert in your field and begin consulting. This is trading less time plus expertise for more money - much better.
I've been doing QA consulting for other smaller clients as odd jobs since forever. Some of the companies include Obecto and Opencode Systems. I also consult start-ups in the field of software testing and quality assurance.
UPDATE: at the end of 2015 I've been engaged more frequently with the engineering team at Tradeo, bringing them my QA expertise.
Employee benefits
Employees do get a lot of benefits:
- Christmas bonus
- Quarterly bonus if the company is doing well
- Performance oriented bonuses
- 25 days of paid vacation which increase the longer you work
- Extra health care
- Unemployment insurance, social securities, etc.
- Gym or other sport activities in the office
- Lunch or some snacks at the office
- Free car/cell phone/laptop, whatever
The bigger and more people oriented the company the more the benefits.
Contractors get nothing! Your contract payment is the only thing you get.
- If you want a vacation - you don't get paid!
- If you are sick - you don't get paid!
- If you need equipment - you have to buy it!
Get used to it and plan accordingly! That said I do use company sponsored MacBook Air and have a small budget for visiting some conferences abroad. In addition I attend lot more events on my own either by helping as volunteer or being a speaker at the event. I also have a personal unemployment and extra health care insurance, in fact several of them, just in case!
Taxes
In every country dealing with tax authorities is a hell. If you are a sole proprietor in Bulgaria chances are you will pay more taxes and social securities compared to being a company for the same revenue. If you can, always incorporate a company and contract through it. As of late all of my income goes through the company entity, I don't receive a single cent on my personal account. At the end of the year I pay myself a divident and use the money during the next year.
Find a good accountant (as much as you can afford though) and make sure they know everything about your income and activities. It's always better to hire an accounting company which can grant you some protection and liability against prosecution from tax authorities - for example if they get their calculation wrong. The extent of this should be written in a contract.
If necessary also hire a lawyer. If you deal with lots of paperwork and contracts (or NDAs) this is definitely a wise thing to do. Don't spare your money, spare yourself going to jail.
Work environment
Working from your bedroom sounds cool but it isn't. You need a quiet and comfortable place to work. Every-day house distractions are your worst enemy. You need much greater discipline compared to working in an office.
My own work environment has evolved to having the best
office chair
I also follow a strict regime and have some fixed hours for work and no-work related activities. I split them between regular 9-5 business hours and evening/early morning to have more flexibility. Whatever the case you have to plan your activities and stick to your plan.
In the office there's always time for a coffee or some chit-chat. At home there is not. Every hour counts to your bonus so it is in your interest to log as many hours as possible and perform actual work during them. There are some freelance websites such as oDesk (which sucks btw) that require you to install software to monitor your screen, camera and keyboard in order the customer to see you were actually working.
Beware that there are physical limits which you can't break without putting your health at risk. I've tried working 200+ hours a month. It is doable once or twice a year when you have lot of things to do. But you can't do it all the time. I've tried, trust me.
Another important thing is the social element. Being out of the office minimizes the opportunities to socialize with co-workers or simply ask for help. A contractor needs some other way to compensate for this - being part of special interest groups, attending events and the like.
No customers risk
As with every business there is a risk of not having the right customers or not having them at all. There are several things you can do to minimize this risk:
- Be an expert in at least one field - this is your primary focus; For example: I'm an expert in Quality Engineering and Red Hat Enterprise Linux;
- Become very good professional in few more fields - mine are cloud computing, Python and Django and general open source programming;
- Grow your network of friends, co-workers, IT professionals and possible customers - you never know where the next customer will come from;
- Stay current with popular technologies (no need to be expert) so you can learn quickly if the need arises;
- Have some backup skills where there isn't much competition and customers will have a hard time finding the right guy. Also make sure you know where to find these customers. My skill is Pascal - its an old language but there are lots of legacy software which still needs to be maintained. Did you know you can even run COBOL in the cloud these days?
Diversify and be flexible - you have the opportunity to generate income from various sources - use it. I will tell you about mine in the next part of this article.
UPDATE:
I also strongly recommend the
The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich
TO BE CONTINUED ... meanwhile use the comments below to ask me things you are curious about.
Comments !