Re: 1099 -- What to ask?

[Andrew Plato <intrepid_es -at- yahoo -dot- com>]

"Johnny Brown" wrote ...

> I'm finally ready to move from a W2 to a 1099. However, with W2s the work is
> pretty much scoped out and you don't have to worry about taxes.
> 
> Does anyone have any advice for working as a 1099 employee and how to 
> accurately scope the work, so that I don't get burned in the process? Are
> there things I should ask an employer; are there things I should ask myself;
> are there things I should ask an accountant; should I pack it in and go home!


What you need to ask yourself is a simple question. What is more important to
you: time, money, or freedom?

If time is more important: get a full-time job with a company. 
If money is more important: contract with agencies. 
If freedom is more important: 1099 freelance. 

1099ing is not always more money and you will definitely have less time.
Because not only do you have to do your job at the client's site, you have to
also run your business.  I worked 60 to 70 hours a week when I started out
1099ing.  

If you do decide to make the leap, consider the following: 

1. Many companies will not under any circumstances work with 1099s. This
includes agencies.  This is because some incompetent business people think they
can get away without paying taxes and then try to blame the agency or company
when the tax man cometh. Sorry. 

2. You need to think like a business. This implies many things:

   a. You need a lawyer or some legal counsel who can draft and review
      contracts.
   b. You need insurance. Call a business insurance provider.
   c. You should consider incorporating if you are going to make over $50,000.
       That means registering with your state, drawing up articles of 
       incorporation - more lawyers possibly. 
   d. You need to setup a corporation account and begin handling your money
      like a corporation does. That means taking income as the company does and
      keeping track of all expenses. Quickbooks! 
   e. YOU MUST PAY TAXES. 1099ing does not mean you will pay less in tax. It 
      merely means the taxing burden has been shifted to you and not your 
      employer. You tax forms are about 700 times more complex when you own a 
      company.  You might want to get an accountant. 
   f.  You need to be prepared to negotiate contracts, handle collections from
       your clients, and argue over money owed to you.
   g. You need to arrange your finances to stomach long periods without 
      income.  Many clients can take 30 to 45 days before they will pay an 
      invoice. Which means it can be 45 to 60 days after you worked
      a given period before you will see payment for that time. 

3. You will need to market yourself. This is where many freelancers fall apart.
They get one job at a decent rate. When that job ends they aren't ready to
market themselves for the next job. Marketing yourself is difficult and takes a
lot of time and money.  

4. If you work with agencies, be prepared to be very flexible about the deals.
Remember, the agency owns the deal with the client, not you.  You're making a
deal with the agency, not the client.  

5. You need to be able to scope and estimate projects very accurately. You
should also know your tools and technologies backwards and forwards.  Clients
won't tolerate vague estimates or consultants who don't know their stuff.  Be
prepared to bend to the client's technology/tool wishes. If you come on strong
preaching certain solutions or tools, you'll get ignored , fast. 
        
Good luck. If you can survive and make a name for yourself - you will
eventually make more money. But you're looking at years of hard work and long
hours.

Andrew Plato 

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