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Comment by acconrad | Hacker News Reader

Am I in the minority here for being a contract developer who is happy to be in this place?

* I make over 40% more than I did when I was full-time, and I was already in the top band for pay in my title. This far exceeds the 15% markup for self-employment tax.

* My wife works full time so she has our back for health insurance

* I can save way more for retirement with an SEP IRA than I ever could with a company-sponsored 401k...it's $55k/yr for 2018 (assuming you contribute 25% of earnings or make $220k/yr)

I can understand that the Gig Economy is certainly not benefiting everyone (e.g. Uber drivers, Postmates runners), but I mean boutique consulting firms have existed for a while and many of them achieve many millions in revenue even with only a few partners. Am I missing something or delusional in my thinking?

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I am not a developer. I don't make a lot of money. I wouldn't say I am happy with my situation.

But, I am medically handicapped. When I had a corporate job, I lived in fear of losing my job for taking too much time off. My life revolved around getting myself together enough to make it to work 5 days a week.

I don't have those issues anymore. I can take time off at will and resume working when I feel better. My access to paid work is not threatened by that.

My income is portable. This has allowed me to repeatedly move to improve my quality of life. Historically, this was a luxury enjoyed by only the jet set and well off retirees, not working stiffs.

I think we need to provide national healthcare in the US to make the lack of benefits less of a problem. But I think if gig work is well designed, it can raise quality of life for ordinary people.

I wish my life were easier. I am really grumpy about it not being easier. But gig work is a viable solution for me under circumstances where most normal jobs simply are not. This has helped make it possible to make headway on my problems when I should simply be doomed with no real hope.

So I think we need to just focus on making gig work a positive. I don't think it is a given that it has to be a terrible experience, even for people who aren't making tons of money.

Yes, you are in the minority. The huge rise in contract work is not in boutique consulting firms or well compensated tech consultants.

It's low skill work, groundskeepers, janitors, housekeepers, drivers. Businesses have moved to contracting to effectively lower total compensation.

I guess part of why I posted that is the audience - I imagine in submitting this article to HN, it is meant to resonate with two subsets of people here:

1. Entrepreneurs running gig economy startups and the implications for how they should treat their workforce

2. Tech workers who work in the gig economy (e.g. Gigster developers, PullRequest reviewers, independent developers)

So I read this and bring up my point because it seems like contract work, inherently, is not the problem. The problem is, what others have mentioned, that the government regulates employment in such a way that we tie benefits like health insurance to the employers, and do not align incentives properly. Would you say that's an accurate assessment?

> I guess part of why I posted that is the audience - I imagine in submitting this article to HN, it is meant to resonate with two subsets of people here:

That's a pretty limited view. There are plenty of non-entrepreneurs on HN who are looking for interesting technology and tech-related society articles. It could also be meant to resonate with people who just think that the gig economy is questionable development.

> So I read this and bring up my point because it seems like contract work, inherently, is not the problem. The problem is, what others have mentioned, that the government regulates employment in such a way that we tie benefits like health insurance to the employers, and do not align incentives properly. Would you say that's an accurate assessment?

I don't agree with that. I think the problem with contract work, especially the gig economy kind, is that it's a further progression of the dehumanization of work. More an erosion of the social contract than a failure of government regulation. That dehumanization reduces the buffers between actual people and the more sociopathic aspects of capitalism.

Yes.

Man is a featherless biped may work to describe the category. But if you give a tax break based on the number of men living in each home, you'll find a lot of people plucking chickens.

3. The customers without whom these sleazy companies could not exist. But Uber is oh-so-convenient, who cares about the societal consequences, right?

Drivers choose Uber when other options are available. So why would you judge that, and imagine that your view of “societal consequences” should trump their right to freely choose the best employment option for them and their personal situation?

trump their right to freely choose the best employment option for them and their personal situation

Yes, because of the externalities. If an Uber driver in London gets sick, he or she will still be treated by the NHS despite Uber’s business model involves paying no employer’s NI.

If you want to say the NHS simply shouldn’t treat those who don’t contribute well that’s a whole ‘nother thing...

Why would the developers of Uber pay employer’s NI for people using their smartphone app? Uber drivers are self-employed and pay tax accordingly.

Disclaimer: I am not an accountant and I am definitely not your accountant.

Heads up that you can only contribute 20% of your earnings up (up to the limit) to a SEP-IRA. This is because you can contribute up to 25% of your taxable income, but your contributions are deducted from your income.

For example, if you make $1, and put $0.20 in your SEP-IRA, your taxable income is $1 - $0.20 = $0.80, so the $0.20 you put in is the full 25% of your income.

To contribute $55K in 2018, you will need to generate $275K of income.

> Heads up that you can only contribute 20% of your earnings up (up to the limit) to a SEP-IRA.

I don't think this is correct. We are talking about employER contribution to the employee SEP-IRA account, which is 25% of the compensation, not exceeding the annual limit (https://www.irs.gov/retirement-plans/retirement-plans-faqs-r...).

Disclaimer: I am not an accountant and I am definitely not your accountant.

You are correct to say that you can contribute 25% of compensation. However, your wages are different than your profits, even as a self-employed person.

Let's say you are self-employed and you make $1 of profits and pay yourself $0.80 of wages. You can contribute the other $0.20 you have to your SEP-IRA, since it's 25% of your wages (or 20% of your profits).

Because of this, you need $275K of profits to generate $220K of income and a corresponding $55K SEP-IRA contribution.

For more, see: https://en.wikipedia.org/wiki/SEP-IRA#Reduced_rate

> Am I in the minority here for being a contract developer who is happy to be in this place? > * My wife works full time so she has our back for health insurance

Being an independent contractor or a self employed business owner is fine for someone who has an entrepreneurial bent coupled with unique skills that are in high demand. Such people can likely charge rates that more than compensate for the lack of employer benefits as a contractor.

However, the contractors described in the article don't appear to have that combination of advantages. Presumably they also don't have spouses who can carry them on their health insurance plans. In a previous era, their jobs might have previously carried benefits, but many of these jobs have been reclassified as "variable workforce" positions, as companies restructure their employment to minimize the carried costs and risk of fulltime employees.

It might work for some people. Many people don't have a spouse providing health insurance - without that it's drastically different. Probably your spouse has a reliable job so you can weather the danger of not having work when a contract ends. You are fortunate, good for you. But if you got hurt, and were single, you'd be much more vulnerable. I'm lucky, I work in a full time job with all the benefits, but not everyone is that lucky.

I consulted for 5 years. I bought my own health insurance, and short and long term disability. I budgeted properly so that I could easily weather periods of time between contracts. This is all while being a single father. It's really not difficult, the hardest part for most people seems to be being responsible with your money. It's certainly not a matter of luck though. The only reason I stopped is because someone offered me significantly more than I was able to make on my own.

Did you ever require care that was not covered by insurance or maxed out your coverage? Or have an expensive pre-existing condition? There's certainly an element of luck involved, especially when it comes to the US healthcare system!

There's an element of luck involved in absolutely everything.

Not specifically to you but this conversation is highly interesting because it demonstrates the two different attitudes - one from the person you were replying to and one from pretty much everyone else.

In software engineering it is the attitude of people who come up with a solution to their problem as compared to the attitude of the people who are complaining that the solution is not general enough and therefore should not be considered a solution.

To me, this conversation represents the two classes.

One guy is living life probably pulling in upwards of $150,000 a year (or living in a lower cost of living place with six figures income). Simply budgeting well will cover all these things. And another thinks that "budgeting" means you don't get to eat on Mondays so you can keep on bills.

Person 1: Life is easier if you budget properly

Person 2: But what if you're a diabetic blind one legged cancer patient?

I guess I'm person 2? I think that's not really what I was saying.

Here's my personal experience - I had a single parent who always worked and always had health insurance through her employer. In her 50s she got hurt and couldn't work much (no cobra, no money either) and lost her insurance. She worked in retail for a while. Then she got cancer and died. Maybe if she'd had more frequent checkups it might have been caught earlier? Maybe less stress would have helped? Who knows. I think if we had national health insurance or health insurance you can't lose, then a lot of people wouldn't face this problem, it would help in the aggregate. She never got to 65, so she didn't jump onto the safe medicare.

So you're saying even working for a company (retail) she was at least no better or worse off than if she'd been a consultant who couldn't afford health insurance on her own.

Whether or not there are improvements to be made to our healthcare system is an entirely different discussion than whether or not an average, able bodied person could reasonably go out on their own without another person working in the home to back them up financially. Of course it would be better/easier to have a support system with another worker in the house. Of course it would be better if you had easier access to healthcare. I would never suggest otherwise.

Also, I'm sorry for your loss. My mother is a cancer survivor and it's just a shit situation all the way through.

Being a low income contract worker is not equivalent to being a diabetic blind one legged cancer patient. There are literally millions of them.

This discussion is not a comparison between a low income contract job and a job as a neurosurgeon. It's a comparison between a low income contract job and the type of "traditional" job that same worker might be qualified for.

Buying your own workman's comp is 0.0075% of your salary in my state ($0.75 per $100 in salary). Disability insurance is $30/mo for $50k salary, so if you're making $30k/yr then disability will be even less. You can make a budget, avoid consumer debt, and save an emergency fund at virtually any level of income. The median national income is $32k/yr for a single person. Sure, a lot of people making that kind of money also have bad personal finance habits. But the idea that it's impossible to live a decent life on the kind of income that half of all single people in the country are making is hyperbole.

Your numbers seem unrealistically low for the types of jobs that low income contract workers usually have. For a job like software development where very few types of injuries are likely to occur on the job and where very few types of injuries would prevent you from performing the job the rates are low. For a higher risk job, like driving the rates will be higher. For instance, in Florida a driver's worker's comp will cost almost ten times the number you stated[1].

[1] https://www.floridawc.com/workerscompensation/policy/rates/

For the majority of those jobs you're going to be making more money, too. Take, for example, construction work. Sure, your disability, workman's comp, etc. is going to be higher than if you're working a desk job. But at the same time the going rate for a random illegal immigrant you pick up at Home Depot around here is $20/hr.

That's a really interesting comment. I had taken it a little differently.

It feels to me that our minds have been atrophied by generations of being told that we can't do anything. Forget budgeting a small business, we can't even budget for our own family. Someone else, be it the government or our employer, has to provide some universal solution to all my problems like saving for retirement or being able to buy an antibiotic for my kid. So someone presents a solution, and rather than being able to take that, adjust it to our individual needs, our psyche is so weak that we just sit back and try to figure out all the ways we can avoid taking agency in our own lives, we need big brother to solve it for us.

Ultimately it's perhaps the same thing though. In your scenario people want to pick apart the solution so they can return back to deciding that their employer or the government has to provide a solution for them.

>Did you ever require care that was not covered by insurance or maxed out your coverage?

Not that I recall, but that situation could happen to you if you had employer or government provided coverage.

>Or have an expensive pre-existing condition?

No, but there are other options like health-shares. These are usually tied to religious organizations and works almost exactly like health insurance, pooling costs. Obamacare grandfathered in existing health shares but made it illegal to start new ones.

>There's certainly an element of luck involved, especially when it comes to the US healthcare system!

There's a certain element of luck to life in general. I'm certainly not dismissing the unfortunate souls you're referring to, but we equally should not pretend like these things are all that difficult for the average person to do.

Last time I contracted I got into a individual market Blue Shield Silver Plan PPO for around $1100 a month. This was for family coverage. It is a matter of budgeting asking for a higher rate if need be. At the end of the day we all need to be aware of some form of budget to know how much we need and how much we can set aside and what not.

Just because you are a contract developer does not mean you earn a high income. Even in the United States.

I am sure that few in my situation would like to admit it. For most of my adult life I have worked as a programmer on a contract basis mainly online for rates or fees that are well below the market rate for my area. For the last few years I have worked for non-funded or poorly funded startups for very small income amounts and no benefits. Even for jobs that were on site, many of the opportunities were spelled out in the ad or description as low rates like $70 or even $40 an hour.

I am sure that people will find lots of reasons to believe that I did something wrong or am an exceptional case, but I don't believe that. I think I am just an exception in terms of people like me who will admit it.

I have had a few well paid contracts but the income isn't consistent.

But not every contract programming gig is rich. It just absolutely isn't. And not everyone can get those high paying gigs. Also for me I have been trying to get into business in startups and not all startups can or want to receive funding and somebody like me is taking those jobs and happy to have them.

Again, go ahead and try to say there is something unusual or wrong. about me. I maintain the only really unusual thing is that I am admitting it on HN.

My current startup does have a lot of potential so I am hopeful about future income.

How would your situation change, if item number 2 was no longer there. (ie, your wife became a contractor) I think that is the largest concern/tipping point for most people..

I think the real tipping point is income level as an independent worker. Personally, I'm in software and got a 60% pay increase when I jumped to 1099. My wife didn't have health insurance offered before, and she still doesn't. But the $680/month I'm paying is easily covered by the increased income. (I was paying around $300/month even when my employer offered health insurance. And my coverage is actually much better now.) But I'm not a typical contractor, just a typical software contractor.

Are you paying 680/mo for just yourself or both you and your wife? That seems like a really high number, but maybe that’s the privilege of youth talking...

We are 38/33 and that's medical for both. Additional $57 for vision/dental (optional, of course). This is in PA. I was unsuccessful in using the marketplace, and in my county there's basically only one insurance provider any more. So I get quotes from them directly. On the bright side, it's good coverage. We could save $150/mo, but the deductibles go through the roof. Since we are child-bearing age (and my eyes are terrible), we prefer better coverage.

Seems like the OP is making enough money that it wouldn't be a significant issue - assuming the OP is living within his/her means. It's the 3rd point ($$) that differentiates the OP from the vast majority - as far as I can tell.

Single father and consultant of 5 years here. It's easy if you're conservative/responsible with your money. Buy health insurance, get short and long term disability. Keep 6 months of expenses in your emergency fund. Don't have any consumer debt. I think the hardest part for most people is being able to not burn through their money as fast as they get it.

It's also expensive, inconvenient, time-consuming, and risky to be poor. None of the suggestions you make are "easy" for poor people.

Consider how much time, energy, and expertise it takes even to research disability insurance and buy the appropriate product.

There are basically two options for disability insurance, 50% or 75% of what you currently make. I'm sure there's other options, but those are the default choices. The minutia of what's covered basically the same across the industry and if you just choose the first provider you talk to it's not really different than getting it from your employer where you had no choice of providers or coverage. The big barrier is realizing you have personal agency and can do basic things like shop.

> The big barrier is realizing you have personal agency and can do basic things like shop.

This argument reminds me of web designers who blame users for the mistakes they make when presented with a horrible user interface -- that there is no system so terrible that the user can't be a moral failure, 100% responsible for their own misfortune.

The difference between you and me is that you believe poor people are stupid and I don't. Otherwise you wouldn't have felt the need to qualify how difficult it would be for "poor people" to figure out how to buy disability insurance, a product that's largely off the shelf.

No, the difference is that I factor in structural factors that keep people poor, while you pretend they don't exist.

What structural factors, specifically, stop poor people from attaining the level of "expertise" necessary to buy disability insurance?

Fundamentally it's lack of time due to having to work 2+ gigs likely while juggling child care or elder care. People with money can pay people to do things for them, freeing up time. Even if they do it themselves, they likely have a more comfortable life so it's easier to devote an evening or a weekend to figuring out complicated medical/legal/financial scenarios.

Do you similarly feel that it's impossible for poor people to buy car insurance? Disability insurance is LESS complicated than that. Do you want the 50% of your current salary or 75% of your current salary option? That's it. Maybe you can pay a few extra bucks for a rider that increases your disability coverage each year as you get a raise. This is not complicated stuff and any insurance agent is going to be happy to walk you through it if you have questions.

Nobody's saying it's impossible or even difficult. But if I'm rushing from my shift at McDonald's to pick up my kid and drop them off at home with some dinner before heading to the late shift at Home Depot, I'm not going to be able to talk to an insurance agent who might very well be happy to walk me through it, let alone spend time actively thinking about what coverage I need.

You dodged my first question. Apply the same thing to car insurance. Are poor people generally incapable of attaining the "expertise" to be able to purchase car insurance?

Car insurance is much simpler than health insurance. Still, I expect most people without car insurance are poor, and the reason they don't have it is not simply a lack of money but also (and relatedly) a lack of time.

Generally yes, poor people are less capable of gaining the "expertise" to do many things, because they are busy trying to stay alive. It's textbook hierarchy of needs.

Noticed other replies; why the fixation on car insurance? I thought we were talking about structural impediments to poor people?

This is the comment I'm responding to:

>Consider how much time, energy, and expertise it takes even to research disability insurance and buy the appropriate product.

This is in the context of a discussion about starting your own business. If you're on the tier of hierarchy of needs where you're struggling for food, then sure, maybe you shouldn't be starting your own business at this point. However, if you have the intellectual capacity to buy car insurance, and also are in a position to be starting your own business, you almost certainly have the cognitive ability to purchase disability insurance.

Poverty impedes cognitive functioning: https://www.frontiersin.org/articles/10.3389/fpsyg.2015.0103...

i.e., being poor is harder than it looks ...

Poor people seem perfectly capable of buying car insurance as evidenced by the fact that millions of poor people have car insurance. What makes you think that purchasing disability insurance is so much more difficult?

They are certainly capable of buying it (at least, when regulation means that it is something you often are compelled and assisted to do before taking a newly-purchased car home, and reminded you must do under penalty of law when registering a car, and actually cited for if you fail to do it and are pulled over driving a car—which is a whole lot of pressure taken together), and many do; whether they are capable of making good decisions and weighing alternatives in that process is...unsupported by the evidence you've cited, as is the question of how this is germane to disability insurance absent a similar regulatory environment.

This discussion started out with me saying that you can start your own business even without another person in the house backing you up financially.

Somehow we've gotten from there to a point where you're suggesting that a poor person who is somehow capable of starting their own small business is, by the very nature of being poor, fundamentally incapable of making a good decision regarding disability insurance options. And it is because of this fundamental lack of cognitive ability that we need a regulatory environment demanding that the business owner (who is themself) must purchase disability insurance on their behalf?

I'm sorry, but you've just gotten to the point of nonsense.

> Somehow we've gotten from there to a point where you're suggesting that a poor person who is somehow capable of starting their own small business is, by the very nature of being poor, fundamentally incapable of making a good decision regarding disability insurance options.

I don't think anyone is actually suggesting that.

I was suggesting, essentially, that poverty is a vicious cycle. That, to quote the movie Hell or High Water, "I been poor my whole life. So were my parents, an their parents before 'em ... It's like a disease, passing from generation to generation. Becomes, a sickness, that's what it is ... Infects every person you know"

And obviously this isn't a universal. There are always exceptions, that goes without saying.

That's exactly what started this conversation. /u/rectang made the following statement:

>It's also expensive, inconvenient, time-consuming, and risky to be poor. None of the suggestions you make are "easy" for poor people.

>Consider how much time, energy, and expertise it takes even to research disability insurance and buy the appropriate product.

This whole thing is about me calling out rectang for suggesting that poor people are too stupid to buy disability insurance.

Me: "People don't run fast on broken legs."

You: "The soft bigotry of low expectations..."

Me: It's possible to start a small business without having another person in the house backing you financially.

You: But what if you're mentally disabled?

Me: Tarzan

You: Jane

;)

The short answer to this question is that they're individually insignificant and Atlus-like in aggregate.

The long answer to this question is, in fact, extremely long.

Nice platitudes. Do you believe that poor people are similarly incapable of buying car insurance?

That wasn't a platitude. That was a suggestion that the smart place to end the conversation was there. If you'd like to continue it, we can, it's just not easy over text.

Poor people seem perfectly capable of purchasing car insurance, as evidenced by the fact that millions of poor people have car insurance. What is it, specifically, about being poor that leads you to believe they lack the cognitive ability to purchase disability insurance? Or did you understand something other than cognitive ability when you read they couldn't attain "expertise?"

yes sometimes they are - because they are poor. The reason many poor contractors can't afford things like disability insurance is because they don't have the money. They have sub optimal spending habits thanks to poverty traps when they have much less income to begin with.

Please read the full context of the conversation. This is not a discussion about whether a specific poor person might have enough dollars in their pocket to buy disability insurance. This is a discussion about whether or not poor people have the cognitive ability to purchase disability insurance. The OP suggested that by the very nature of being poor a person should not be expected to be able to attain the "expertise" required to purchase disability insurance.

My contention is that this is a disgustingly classist view against poor people. Poor people, by and large, seem perfectly capable of purchasing car insurance, and disability insurance is generally less complicated.

It's not a lack of "expertise" that is keeping poor people from buying disability insurance. It is a lack of money.

But possibly not easy for an Uber driver, rather than a highly skilled tech worker.

The national average income for Uber drivers is about $20/hr. That's plenty to live off of. The average in Detroit is only $9/hr. That's a tough place to be, but not unique to consulting or gig jobs.

Are you factoring business expenses into that $20/hr, or are you confusing raw revenue with income, and failing to take into account all the risk that Uber offloads onto its contractors?

If you're confused, then you have a lot in common with many Uber drivers!

Yes, that national average of $20/hr is after expenses.

That language, offloads, is loaded. This idea that it's someone else's responsibility to handle even the most trivial of life's decisions for us is toxic. If you don't understand the basic concepts around running a small business, there's plenty of books on the subject in the library.

> Yes, that national average of $20/hr is after expenses.

Where on earth is that number coming from? Uber?

https://www.buzzfeed.com/carolineodonovan/internal-uber-driv...

"In early 2015, a study commissioned by Uber found that drivers in 20 cities, including New York, Los Angeles, San Francisco, and Boston, were grossing around $17 an hour.... But the $17-an-hour figure was based on data from 2014, when Uber rates in most cities were higher than they were in late 2015. It was also based on gross earnings and did not account for driver expenses."

https://www.washingtonpost.com/news/the-switch/wp/2016/06/27...

This is from an article complaining about how little Uber drivers make...

>But in three large metropolitan cities, drivers make far less than the national average, about $20 per hour, after expenses.

That Washington Post article is garbage. It cites as the source of its numbers, the Buzzfeed article I quoted. But the only place the number "$20" appears in the Buzzfeed article is this:

"None of these advertisements mention driver expenses. The same goes for the alerts Uber sends to drivers — sometimes five times a day or more — telling them that other drivers on the road were making $20 or $30 an hour in gross fares."

Okay, so the first google result I found had an inflated number. I don't really get what point you're trying to get to. If you think I'm arguing Uber is a good/lucrative place to work, I'm not.

You do seem to be arguing that Uber drivers should have sufficient money to do a variety of things based on completely erroneous information about how much money they have.

Let's put some context on this. Disability insurance is $30/mo. And that amount is generally tax deductible for the self employed.

Yes, if you're poor it will be harder to buy health insurance, but you can avoid consumer debt at virtually any income. You can save up an emergency fund at virtually any income level. The fact that it might get more difficult to do any of these things as you get closer and closer to the lowest end of the poverty spectrum... is that really the argument we're trying to have? Because that seems like a silly thing to interject in a conversation about people who are going to be starting and running small businesses.

Disability insurance is $30/month for you, a person whose job has a near zero risk of causing a disability and whose job can still be performed even with many forms of disabilities. It is dramatically more for people with riskier jobs.

$30/mo is the national average. Yes, if you're a trapeze artist it is probably going to be higher. But usually, so will your income.

Keep 6 months of expenses in your emergency fund.

You have to have sufficient income to consistently cover basics with money leftover. Some people simply don't have that.

It's so easy. All you have to do is make plenty of money. Why didn't those stupid poor people think of that?

You are making a lot of assumptions about my current income and how much I have made historically. I did all of those things except buy my own health insurance when I was working inside at a pizza place, that means I was making less than people who deliver pizzas for a living.

The trends in the article don't impact people like you much -- but they have a huge impact on these Uber drivers and Postmates runners, and there are a lot more of them. Your situation doesn't generalize to the wider population.

Being a contract developer is a happy place to be. Here are some things you haven't mentioned.

* Contract developers have greater flexibility on taxes. "Pass through" entities are big now.

* Contract developers are more independent in a lot of ways. Some employees have clauses where they give up all IP they create.

* Contract developers often move from project to project more, which gives them a better network effect then their W2 counterparts.

The real question I have is what prospecting looks like, as that is typically the most difficult part of the process. In my experience, many BigCos like contracting through temp staffing agencies.

Are there reliable sources of contract work? I have yet to find any, though I admittedly haven't been looking the hardest.

Staffing agencies are reliable sources open to all programmers, but I have never personally taken a contract from one.

The best paid work comes from a professional network. When I look for a new project I send an email to former co-workers and some past clients asking for leads. I then follow up on those leads.

For those interested (namely, me) could you describe your current situation?

* What sort of business entity are you using? What considerations did you make when choosing this entity?

* What is your work like? Are you remote/onsite? Do you have one client or multiple?

* What is your staff like? Are you a lone worker? Do you have coworkers in your business? What did you choose to offload onto others?

* How do you manage taxes, insurance (beyond those covered by your wife), and finances?

* What alternatives have you considered in the event that your wife couldn't cover you?

Mostly interested because this seems like a viable career path (to me) but I would definitely want to consider it with eyes wide open and learn from someone else's successes and failures.

I've been doing contract work since 2004

* LLC with S-Corp designation. This is very tax-advantaged vs. Sole Proprietor.

* Currently, I'm mostly on-site for one client.

* 1-person shop.

* I have an accountant. You want a good, small business accountant.

* I buy health insurance for my family through the ACA exchange. It's very expensive so make sure you factor it into your rate.

I've had 2 FT gigs that lasted 6 months each since 2004 and regretted it both times. If you can handle having to network and interview frequently you can make more money with more flexibility as a contract developer.

Thank you very much for the insight! A few questions, if you would:

* What are some recommendations you have for establishing a rate? Do you use hourly, weekly, or project?

* What do you look for in a small business accountant (it sounds like you may have had a less-good one in the past)?

* What avenues do you typically find yourself using for contract work? i.e. LinkedIn, job boards, word of mouth, etc?

* I use hourly mostly because it is common and is met with the least resistance. Either way, raise your rate at least a little after each gig. Don't get complacent, just keep ratcheting it up.

* I've actually been blessed with a great accountant. He's saved me thousands over the years and sent letters to the IRS on my behalf clearing up a couple issues along the way. I would look for someone who specializes in small, professional service firms that is used and referred by people in your area. If they tell you they don't think you should organize as an LLC, look elsewhere.

* Starting out I used recruiting firms. They have the advantage of an established network and getting you paid every 2-weeks. The disadvantage of course is they take a cut. Their first ask will always be a low-ball hoping they can get a huge margin. Always try to get them to make the first offer and always ask for more. You'd be surprised how much room they have to negotiate up most of the time. As I've made connections over the years I've relied more on my network, but I'll still use an agency to fill the gaps. Also, boutique consulting agencies can be great for sub-contract work. They often need to staff up for a project they just landed, but don't want to take on full-timers and they usually command excellent rates.

> boutique consulting agencies can be great for sub-contract work

I just wanted to second this point. In this way, checks both boxes off: one for getting the advantage of an established network like a recruiting firm; two for getting you the higher rates and not needing a middleman

Awesome! Thank you very much for your time and answers!

* Currently sole proprietor. Will switch to LLC or C Corp in 2018 (depending on income), but I'd talk to your accountant to find out what's best for you.

* I'm remote currently with high utilization client (as a subcontractor) and smaller retainer clients.

* I am a firm of 1.

* I have an accountant to manage taxes and finances. I keep meticulous records of what is a business vs a personal expense. The subcontractor gig is insured by the main contracting company. The retainer gigs stipulate it is knowledge/access only, so without any IP deliverables required, so there's no need for insurance on that. I may get insurance if my employment situation changes in terms of the contracts I take on. For this, I'd talk with your lawyer.

* I would just buy health insurance through the state. I live in MA, so we have to have something. We're both young and healthy, and she has an incredibly stable job, so I don't worry about this one too much.

I should point out that I'm very new to this (4 months in) so definitely don't look at me as a source of having "done things right" - I am learning every day and still sweating it all.

Very interesting. Thanks for being candid with your freshness to this experience; it's valuable all the same. A few more questions, as your availability permits:

* Have you considered an S-corp? If so, reasons against listing it as an option?

* Any recommendations in general contractors (even if not specific ones, just things to look for in a general contractor)?

Thanks for your time and response(s)!

* I haven't considered it, I just do what my accountant advises

* A general contractor? I hear that term I think of those guys who work on your house. Could you be more specific?

* fair enough

* I guess I just lifted the term as it seemed appropriate; given you mentioned subcontracting I imagine there is an entity above you that does the direct contracting - any recommendations for what to look for in that contracting authority?

Good marketing. They came to me

> This far exceeds the 15% markup for self-employment tax.

It's not even 15% difference, as the salaried workers also pay half of it, so the difference is just the employer portion, which is paid by self-employed contractors.

I've been paying for my own insurance (a bronze plan) for the last three years, as it was cheaper than adding me to our family plan. It wasn't very expensive (started around $300/month in WA), but was going up about 20% each year, so this year we switched to a high deductible plan.

>"It wasn't very expensive (started around $300/month in WA), but was going up about 20% each year, so this year we switched to a high deductible plan."

This is what bugs me to no end about insurance. They get you with a low intro rate, then jack it up a massive amount annually, and leave your option as basically switching (if there are better options even available), or shouldering more of the risk by moving to a high-deductible plan (which makes them more money).

Are there no good, consistently-priced insurance options for those who are not full-time employees with benefits?

Not just that; they keep changing the plans, so that the plan you are currently on may not be available next year, but there is a "similar" one that is 20% more expensive and has worse coverage (and/or higher deductible).

Those contractors that have LLCs may look into group rate insurance, as those are generally cheaper than individual ones (but you may need to have more than one employee to qualify).

> * I can save way more for retirement with an SEP IRA than I ever could with a company-sponsored 401k...it's $55k/yr for 2018 (assuming you contribute 25% of earnings or make $220k/yr)

Note on this point: many company-sponsored 401ks do allow you to contribute up to $55k/yr - though a good chunk of that will be after-tax money. (Though again, the after-tax can often be converted to Roth, which has its own benefits)

You're certainly more exposed to downturns, much like solo lawyers, consultants, etc.

It's a trade-off and comes with definite benefits like you listed.

> You're certainly more exposed to downturns

At the same time, companies fire by the millions in aggregate in a recessionary environment. Or worse, your employer simply vaporizes and goes out of business, which similarly happens in droves.

If you're a contractor, your exposure depends on who you're doing business with, how strong their circumstances are, just as it does when it comes to who is employing you.

The U6 went up to ~17.5% during the great recession. There is a very small group of elite tech companies that weathered that storm without firing people. Google is up at 80,000 employees now, Microsoft is at 125,000. Do they avoid layoffs in the next recession? I'm skeptical. Microsoft has almost no growth, any recession would hit them hard. Google's growth is 1/3 what it was ten years ago, a recession would slam their ad business and bring their growth down toward single digits.

Only 40% is this net? I would be aiming for > 100% Gross as a it contactor in the UK and pay less tax.

Well my utilization rate is 100% right now, so I objectively make more money than I made before, there is no getting around that one. If it were lower I would indeed need to pad it more, and hopefully with my next engagements I will be able to hit that rate :)

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