

Ask HN: contract work - throwaway1336

im considering some contract work... i have a special skillset, and the company that is offering the contract will pay ~68/hr.<p>The median in my area is roughly $45/hr.<p>It's an interesting position in that I'd be speaking directly with customers, while also doing integration of systems, as opposed to just being an in-house coder.<p>Is there a reason that I should be wary of doing contract work? Is there a reason why this contract is willing to pay so much more than a regular fulltime position?<p>Ultimately, I'd like to start a company, and this could be a good way to build capital, and control the amount of hours that I'm working as well, so that my work time doesn't bleed into the time I want to have for startup projects/ideas.<p>What's your experience with contract work?
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gigantor
Contracting pays more since the employment term is fixed and job security is
'less guaranteed' than a salaried position. Also, finding a new gig every few
months, learning systems from scratch, and being embedded into a brand new
environment frequently is not for everyone.

One advantage of contracting is that you can get a nice long break when you're
done (i.e. being between contracts). Depending on your ability to budget
financials for this time that you're out of work, ability to find new
contracts, and motivation level when unsupervised, you can use this time to
focus on a company. In a likely scenario, you can make the same net amount in
9 months as you would in a year for equivalent work after taxes, all depending
on your negotiation skills and gap between salaried and contract pay, leaving
3 months to focus on your company.

Get a good accountant, it's well worth the cost in tax savings. As others
said, watch for the big tax bill at the end of the year, or you can work with
your accountant to pay taxes in monthly periods. A staffing agency is
sometimes easier to deal with for taxes since they handle service taxes, if
applicable.

Get good at doing interviews, since you'll be looking for new work once or
twice a year. Recruiters are often a necessary evil so be good to them.
Contractors also naturally have better networks since they move around so
often and make new friends.

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retroafroman
They'll pay more for contract work because you'll end up picking up the taxes
and paying for your own benefits out of that. I assume they'll take you on as
a 1099 contractor, which means you will have to pay all your own taxes at the
end of the year. Make sure to budget for that, it's easy to forget you'll have
to cough up 15% or so in taxes the next year.

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throwaway1336
oh ok. so the overhead is 15% taxes wise. interesting. good data point.

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pjy04
Assume 20% just to be safe.

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frommers
Taxes are a big thing to keep in mind and I can't tell how important it is to
speak with a good accountant and lawyer. They will be able to help in how you
set your company up, even if you are just one person you'll want to look at
all your options like LLC, S-corp, etc. Having the right structure will be
able to help save you on the taxes, and make sure you are protected.

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throwaway1336
thanks frommers.

as it turns out, i just found this as part of a position from a staffing
agency. does that simplify things a bit?

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throwaway1336
also, another question i have is..

is contract work a good avenue towards my own entrepreneurial path?

im working a startup company now, and i kind of feel that i'm not getting the
kind of hands on customer experience that is required to really build a
startup that focuses on problem solving for customers.

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petervandijck
Yes it is. It will teach you things like managing your own taxes, cash flow
etc.

