Re: Consultants and Overhead

Subject: Re: Consultants and Overhead
From: "etymes -at- lts -dot- com" <etymes -at- lts -dot- com>
To: "TECHWR-L" <techwr-l -at- lists -dot- raycomm -dot- com>
Date: Tue, 07 May 2002 08:19:43 -0700


Justin Ressler wrote:


I have happily been consulting for almost a year, however, the company that
I am contracted to is "acquiring" all of us consultant types to field an
office. <snip> Obviously, the company would like to see as many employees as
possible as we continue to grow. The consultant offer has now changed to
"If you consult, you may have to pay for some of the overhead."

The only differences these days between being a consultant and being an employee are the legal definitions of employee vs. consultant, which have to do with taxes and with general control of where and how you work. You may get benefits as an employee that you don't get as a consultant, and those benefits may include monetary things like medical insurance and stock options and nonmonetary things like being included in some types of company meetings. Usually a contractor can be terminated at will with no extra pay; an employee may get things like severance pay, sick leave, and paid vacation time.

It sounds like the company that has been placing you wants to create the illusion of stability, and they're making a mistake that consulting companies commonly make - they believe that having a collection of employees makes them look more attractive to clients. If that is their belief, then having you remain a consultant isn't going to be perceived as beneficial to the company as if you were their employee. (It's all about how much control they think they have over you, the reasoning being that if you're an employee it will be harder for you to leave than if you remain a consultant. The last two years have proven that reasoning to be false, but some illusions die hard.)

So your choice is all about whether you want to continue to work with these folks. They will take their contracts with them, so if you opt to stay a consultant, you probably won't get the good assignments. If you can make it solo, and you like it that way, and your local economy supports you with a reasonable assortment of projects, your choice is clear. However many people find the marketing end of being a solo consultant to be tedious and even frightening at times.
Elna Tymes
Los Trancos Systems



Has any other consultant had to contribute to the overhead of the company?
How did you adjust your rates? Is there a general percentage, or did you
adjust based on the amount of overhead that you paid?





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References:
Consultants and Overhead: From: Justin Ressler

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