Self Employed Bros - get in here

[itchyfingers]

Sup GGFbros,

Haven't been around much lately. I get 90% of my GGFing at the office, and I have been office-less all month. My entire company got laid off, in an email, on a Sunday, with no severance; which was awesome. The company asked me to stay on as a consultant to wrap some big projects I have been working on all year. While completely unexpected, I'm not looking at it like a bad thing. The wife and I have been saving money, but that was more for investing rather than lets-have-Itchy-start-his-own-business money. The thing is, I have always figured I'd end up doing consulting in the twilight of my career before I retire, but now that I have been sorta forced into it I think - why not give it a run now? Rather than jump back into a full time role, I am going to try and add a couple of other clients and see if I can make the consultancy a permanent thing. Worst case scenario, it doesn't pan out, I learn some lessons for later in life, and I go find a full time job. Still need to work out a bunch of shit - how much to charge, what kind of corporation to create, tax implications, insurance, etc.

So I figured I'd ping you guys that have done it before...

How do you calculate / justify your rates?
What kind of corporation did you setup?
How much do you pay for insurance in a year?
What do you set aside for taxes, and how often do you pay those taxes (quarterly, annually)?
What was the best piece of advice you got about starting your own business?
If you could go back and do it over again, what would you do different?

[clipless bumper]

guess it really depends on what you are doing - but consulting rates are usually 3 - 5 times higher than equivalent hourly/salary rates.
So around here - $100 - $200 per hour - I'm sure the CA thing would jack those up even higher.

I would also ballpark it at twice what your current employer is paying you - assuming that they are already paying you significantly higher than your wage when you were an employee.

[JiveTurkey]

I'll only address the scenario; but mojo sent Itchy. Sounds like even if you are in the beginning stages of planning your next move; you at least have a good attitude about the situation. Ugh. You'll bounce back no matter what you end up doing.

[SuperFlyinMonke]

A basic rule of negotiation is not to make the first offer. If you got any benefits, pension, etc. then your actual cost to the company was likely 2x your salary. Given the temporary nature of contracting/consulting, the wage is higher and if you know they specifically want you, that puts you at an advantage.

Best of luck.

[BroSlinger]

What do you set aside for taxes, and how often do you pay those taxes (quarterly, annually)?
- quarterly estimates. TONS set aside.

What was the best piece of advice you got about starting your own business?
- hire slow. fire fast.
- read the fucking contract.
- if you wouldn't buy it, don't sell it.

If you could go back and do it over again, what would you do different?
- I would learn what I know about taxes sooner. deductions. estimates. etc.

[sleewell]

sorry i cant offer any help but if any self employed bros ever need a home loan and are having problems give me a shout. I'm an underwriter at a bank that does mortgages where you only need a P&L or 12 months of bank statements. slightly higher rates but not having to provide tax returns can be helpful.

[Tortuga]

Oh shit!!!!!!!

[madkeithv]

I know scenarios aren't exactly comparable, but I did something similar 6 years ago when I moved from Belgium to England. I was employed by a large multinational but I had decided myself I'd be moving abroad. I gave them the heads-up and suggested I'd be willing to continue on as a remote consultant with travel. They agreed in principle, and we set about getting some pretty good contracts worked out. Here are the things I remember most:
- Setting your rate. There was a sweet spot for rate because the difference between cost and take-home pay as an employee, and cost and take-home pay as an external consultant was really quite large. I managed to negotiate a rate where I would clearly cost them less than I did as an employee while taking home more. In hindsight, that was a little simplistic as with experience I learned that the additional risk you take is quite significant, but I lucked out and it ended up really boosting my financial life. For me, my rate ended up being around £70/hour ex. VAT. It also sounds more than it is, because as you have to invoice, you find that getting a full invoicable day might be difficult unless you work ridiculous hours. Admin, overhead, it all takes time out of your invoicable hours. It depends on the client whether you can pass that on.
- Tax. I did a rough search on what I could expect the worst-rate tax to be, and then set aside about 50% more than that each month. It worked out great, I ended up at a lower tax rate than I expected, which then allowed me to use the money saved to bridge unexpected downturns. This included my wife going through a very difficult pregnancy with a difficult birth, basically leaving me the sole carer for the family for almost 6 months, without having to fret about money. Just that alone made the whole thing worth it, warts and all. I would never have been able to do that as an employee.
- Contracts. Get a specialised lawyer/solicitor to go through your proposed contracts. Make sure your client knows this too. They are less likely to push their luck if they know a professional has already looked at it, and they'll take you more seriously. It's just good peace of mind.
- Insurance. I didn't worry about it enough. Still don't. Get what you legally need only, unless you have a really bad potential downside if you have bad luck. I didn't, I decided just to save the money.

My best piece of advice is to stay chill. It's a different life. You've got more control, and more responsibility. It's going to feel like a lot on your shoulders at times, but it'll work out. I'd do it again. In fact, I did, when I moved back to Belgium in March. Admin is more complicated here, and it's still not fully sorted, but I'm working and invoicing and life is pretty good.

[newholland]

oh damn itch. sorry man, that blows.

my best advice to you is hire a trustworthy accountant FIRST and talk to them to negotiate these changes. they will keep you safe, legit, taxed fairly, and be an amazing ally that will keep you out of the weeds. the rest you will sort out, cause you're smart. but as we all know, law doesnt care about smart- so leave THAT to pros.

[itchyfingers]

Thanks GGFbros, I appreciate the well wishes and the stellar advice. I've got a few things hopefully lining up, so I'm feeling pretty good about it.

[facefirst]

Sup GGFbros,

Haven't been around much lately. I get 90% of my GGFing at the office, and I have been office-less all month. My entire company got laid off, in an email, on a Sunday, with no severance; which was awesome. The company asked me to stay on as a consultant to wrap some big projects I have been working on all year. While completely unexpected, I'm not looking at it like a bad thing. The wife and I have been saving money, but that was more for investing rather than lets-have-Itchy-start-his-own-business money. The thing is, I have always figured I'd end up doing consulting in the twilight of my career before I retire, but now that I have been sorta forced into it I think - why not give it a run now? Rather than jump back into a full time role, I am going to try and add a couple of other clients and see if I can make the consultancy a permanent thing. Worst case scenario, it doesn't pan out, I learn some lessons for later in life, and I go find a full time job. Still need to work out a bunch of shit - how much to charge, what kind of corporation to create, tax implications, insurance, etc.

So I figured I'd ping you guys that have done it before...

How do you calculate / justify your rates?
What kind of corporation did you setup?
How much do you pay for insurance in a year?
What do you set aside for taxes, and how often do you pay those taxes (quarterly, annually)?
What was the best piece of advice you got about starting your own business?
If you could go back and do it over again, what would you do different?

How do you calculate / justify your rates? I just kinda figured my rates out by trial and error. I'm finally at a point that makes sense.
What kind of corporation did you setup? I didn't set up a corp or LLC. I'm a sole proprietor. I have no need for a corp or LLC setup since it's just me.
How much do you pay for insurance in a year? My wife carries our insurance. It's a pretty great one.
What do you set aside for taxes, and how often do you pay those taxes (quarterly, annually)? I set 35% aside and pay quarterly
What was the best piece of advice you got about starting your own business? Don't second guess yourself and never apologize for your rates or offer discounts.
If you could go back and do it over again, what would you do different? I would definitely do it all again. I would have just saved more money up before I did it. Still, the pros outweigh the cons by a landslide.

[neilrocks25]

I know scenarios aren't exactly comparable, but I did something similar 6 years ago when I moved from Belgium to England. I was employed by a large multinational but I had decided myself I'd be moving abroad. I gave them the heads-up and suggested I'd be willing to continue on as a remote consultant with travel. They agreed in principle, and we set about getting some pretty good contracts worked out. Here are the things I remember most:
- Setting your rate. There was a sweet spot for rate because the difference between cost and take-home pay as an employee, and cost and take-home pay as an external consultant was really quite large. I managed to negotiate a rate where I would clearly cost them less than I did as an employee while taking home more. In hindsight, that was a little simplistic as with experience I learned that the additional risk you take is quite significant, but I lucked out and it ended up really boosting my financial life. For me, my rate ended up being around £70/hour ex. VAT. It also sounds more than it is, because as you have to invoice, you find that getting a full invoicable day might be difficult unless you work ridiculous hours. Admin, overhead, it all takes time out of your invoicable hours. It depends on the client whether you can pass that on.
- Tax. I did a rough search on what I could expect the worst-rate tax to be, and then set aside about 50% more than that each month. It worked out great, I ended up at a lower tax rate than I expected, which then allowed me to use the money saved to bridge unexpected downturns. This included my wife going through a very difficult pregnancy with a difficult birth, basically leaving me the sole carer for the family for almost 6 months, without having to fret about money. Just that alone made the whole thing worth it, warts and all. I would never have been able to do that as an employee.
- Contracts. Get a specialised lawyer/solicitor to go through your proposed contracts. Make sure your client knows this too. They are less likely to push their luck if they know a professional has already looked at it, and they'll take you more seriously. It's just good peace of mind.
- Insurance. I didn't worry about it enough. Still don't. Get what you legally need only, unless you have a really bad potential downside if you have bad luck. I didn't, I decided just to save the money.

My best piece of advice is to stay chill. It's a different life. You've got more control, and more responsibility. It's going to feel like a lot on your shoulders at times, but it'll work out. I'd do it again. In fact, I did, when I moved back to Belgium in March. Admin is more complicated here, and it's still not fully sorted, but I'm working and invoicing and life is pretty good.

Awesome post, and your back in Belgium... evading brexshit?

I am tempted to join you, and you are spot on here.

[neilrocks25]

Rates maybe charge a little less at first
Ltd company
Insurance not really just watch out
Tax, get an accountant and be conservative

[madkeithv]

Awesome post, and your back in Belgium... evading brexshit?

I am tempted to join you, and you are spot on here.

Yeah I had to go - the multinational that is still my major client gave a heads-up to all contractors from the UK that their contracts would be terminated upon Brexit because of the legal uncertainties. So here I am, somewhere that's likely to stay in the EU for a bit longer, trying to learn French (different part of Belgium), and speaking to the cows that graze on three sides of the new house.

It's been a big step, and for the wife and children even bigger because they barely know any of the language. We're getting there though.