You’re on your own now! part 2

Going freelance was a thing that was always in my mind, but I didt not have a concise plan on how to do it.   I always worked fulltime for employers, and only seldom met freelance working people.

Turns out: it’s very easy!  Just quit your day job!

Well, it could be that easy, but I would advise against it!

How to get a job

There are a few ways to go from employed IT consultancy to self-employed IT consultancy, and then even there is a difference in paths you can travel.  I chose the easiest path: published my CV on a few job sites, reacted to a few job openings calling for contractors and have middle men do alot of work.

As a result, you can be fairly secure that as an IT consultant, network or systems engineer with some years of experience, you can find a project as a contractor. Same goes for programmers of different sorts. The downside is that the middle men take a cut, but the upside is that these middle men can get you in bigger companies that don’t like to work directly with contractors, and that you don’t need a giant network of people to get contracted.

This is an easily solution, since the art of selling is a feat many IT nerds not have.  Being interviewed is easier than really pitching your services and having the client hire you for a product or service they didn’t even realise they needed.  In this scenario, you step very late in the game, after the client has assessed they need a contractor, and contacted many men in the middle.

So you basically post your resumé, look for contractor job openings, respond and make sure you have a day price in your mind, since most clients just pay per day, and have the project management done inhouse – or by another contractor.

What to get paid

To get to that day price, you should better sit down with an accountant.  This guy (or gal) is going to cost you money, but they are there to have you earn money too.  You don’t need an accountant for paper pushing (although he/she better does too), but their value should be in helping you invest your money wisely, defining how you should manage your money you’re making, since you’ll be making more than you can spend, and what you can’t spend, will be taxed thoroughly.  An accountant with excellent relations with tax people is a must then.

Your accountant will most probably suggest you ‘incorporate’ yourself as soon as possible.  This for obvious tax reasons, since without this, you risk in Belgium to donate over 50% of your fresh income to the government, and then you still have to consider any insurances you have to get yourself, because you’re not an employee anymore.

But how much should you ask?  A reasonable rule-of-thumb is that you better double of what you make now, but what you should really do, is get an insight of what your expenses are and will be (including transport, telephone and internet services, hardware, …), and what you are making now.  Double thát, and you’re still not in the safe zone.

Basically, the ideal situation is to quadruple your current pay pre-taxes (excluding costs).  You’d think that’s alot of money, but when you divide that by 3: 1/3th is what you are left with, 1/3th goes to costs you will make to do your work including insurances and 1/3th is pure savings.  You need the savings and insurances to prepare a cushion for those situations where an employee can trust on the cushion the employer offers.  And it happens to be the market rate.

You could decide to go under the market, but you wouldn’t get much better from it, and you’d do your colleagues a bad service, and consequently you: if everybody lowers their rates and you want to differentiate by having the lowest rates, your rates would need to go down too.

So, you rather differentiate on the services you deliver.

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