Ask HN: Whatever Happened To Freelancing? | Hacker News Reader

Ask HN: Whatever Happened To Freelancing?

I'm trying to break into freelancing/consulting/contracting.

Following best advice on the net/podcasts/etc I'm contacting my past companies plus some new ones and all of them tell me the same exact story.

"No. We cannot hire freelancers directly. You must go through a third company (consulting firm/body shop) which we work with."

But why the heck would I even consider doing that? The whole point of freelancing (at least IMO) is being _free_ from the middlemen.

Anyway, humoring the idea of actually doing that I contacted one of these middlemen companies and was sent a hideous contract full of terms that -let's put it mildly- are not in my favor. (Liabilities fully on me, limitations on where I can go afterwards, Information asymmetry, need to support for long after project finish, etc).

So the question remains - is there any real freelancing still on? (I'm not talking platforms here - I wouldn't go there for several reasons).

Could it be that the specific market I've been looking at (UK/IE) is skewed like that and other markets are in better shape?

Thanks

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Fraud, causing 3rd-parties to insert themselves between companies and freelancers. And then, of course, comes the VC attempt to monopolize this arbitrage, giving way to fewer and fewer options for freelancers to work through.

The entire world is undergoing a shift because of the internet, but I don't see people talking about it. We've had a social system of personal ethics and credibility up till now, but "platforms" create this many-to-many relationship between everyone, none of whom know anything about the other, really. So everyone hides behind legal protections that are becoming more and more onerous. All of this only favors the bigger pockets. So it's a trend right up and past the point the OP is talking about, and will -- can -- only get worse.

I'm sure there's a term for all of the de-personalization, but I don't know what it is. I'm also sure that it's responsible for massive, widespread decline of mental health in society, but I digress.

And I say all of this after having dipped my toe into the consulting racket 25 years ago, working with a boss of a friend who turned out to be a giant asshat. (To wit: He embezzled all the company money on boats and trips.) I have ideas on some software that would greatly benefit some big companies in a particular market, but I know I'd have to work through someone else to make it happen, and I just don't have the energy to do that.

I don't know. Maybe there was a sweet spot a few years back, but 20+ years ago you only had your personal network to count on, none of those fancy marketplaces. And it was a slow grind. And there were intermediaries which did give you a constant flow of work but took a large cut, and you often ended up being the 5th or 6th contracted party on a project. It's, TBH, more or less the same - except now you actually do have the fancy marketplaces and VCs that give you an alternative.

That's true but it's important to note that back then there wasn't as much exposure and connectivity so the number of options was limited in a good way. We're now living in a largely connected world with equal opportunity yet very unequal results. Those with leverage use it and those without are left to scavange

Good news is on the way: AI is going to make it so that nobody will every trust anything that doesn't involve seeing a flesh person. The whole internet effect is about to be reversed because it is going to be easy to fake literally anything on it.

The more likely scenario is that no one will trust anything that isn’t verified with your government provided digital ID.

The more likely scenario is that people will just trust whatever the AI says and end up believing a bunch of bullshit

The most likely scenario is all three, government Id, in person and really bad ai. I highly doubt we will truly ever lose one of these options between humans, government paperwork and automation that likely sucks.

I would trust AI more than a lot of people

you just pwned yourself Sir: AI was programmed and trained by a lot of people

I think this has also to do with the fact that there is also no platform that caters to business with things like automatic background check , contract negotiation and signing etc for freelancers. Companies are wary of signing a new contract individually with every freelancer as it takes a lot of overhead to go through legal anyway.

> We've had a social system of personal ethics and credibility up till now, but "platforms" create this many-to-many relationship between everyone, none of whom know anything about the other, really.

I agree with this, without maybe being able to put it in words my self. Reputation and credibility will be the two things at odds when one can just change platform/network/"area of the internet" if they don't get what they want from those around them.

>I'm sure there's a term for all of the de-personalization, but I don't know what it is.

Let's see ...

marginalisation? disenfranchisement? alienation?

Just throwing some words out there to see what will stick ... like the big Jee ... oops (covers mouth, runs away)

It's a generalized loss of personal relations, so...

Those words would fit it if it was about a single person, but it's generalized. So there's nothing to get marginalized from.

I do favor "community dissolution" or on the extreme "society dissolution". You can find similar things in history to take lessons from (it doesn't end well), but you will need to go way further than what you are trying.

Atomization.

Great comment. Frankly, the best summary is-- in the pursuit to get rid of middlemen, the middlemen arose in different clothing. Everyone wants arbitrage and leverage their into a better life.

>I'm sure there's a term for all of the de-personalization, but I don't know what it is.

deracination?

Just create a company for yourself.

When that sort of situation arose for me, it seemed mostly just that companies I wanted to work with weren't really set up to handle individual freelancers. They weren't trying to scam me or let their buddies skim off the top. So, I made an S-Corp. Haven't had a problem since.

Also makes it easier to do stuff like get project insurance, which some clients have also required. It's not expensive or time-consuming, you just have to jump through the hoops the bureaucracy wants you to jump through sometimes. And if that makes you uncomfortable, then you don't have to go after or take those kinds of gigs.

Went the LLC route, got professional insurance (megabux of insurance is actually not that expensive), those two tick most of the boxes for most potential clients. Individual experiences will vary of course, and there are totally folks out there who want to kick their friend's middleman business everything they can.

Same here, single person LLC awhile back.

The big advantage of this route is you have much wider discretion to define your salary, business expenses, what you can claim on taxes, etc. It was really eye opening to me what the accounting possibilities are.

The downside is you need an accountant (or be very good at it yourself), and of course you need steady clients.

Indeed. Scubabear the employee is still limited to the same 401(k) contribution limits as everyone else, but Scubabear the employer LLC can have some very generous employer contributions for all of their employees (which happens to be just the one).

It’s so annoying that that sort of thing isn’t available to everyone. Similar for mega back door Roth IRA. Which my partners work supports but mine doesn’t. Iirc being able to back door or not was something like 175k dollars over 30 years.

Hey, can you share any resources for learning this stuff? I've started to play around in these waters, meeting with an accountant next week, but I'd like to get semi-ok at it myself. Any books or resources would be appreciated.

I learned it all online from various sources, and confirmed with an accountant. Start by Googling “single proprietor llc tax advantages”, and go down the rabbit hole of sole proprietorship vs single person LLC vs S-Corp.

From memory S-corps are a little involved to setup, but have some unique advantages. Single person LLC’s are dead simple to setup. In my State, NJ, it was simply getting an EIN from the IRS website, doing a name search for a unique enough name, and then registering the LLC with the State for a small fee.

Unlike a salary, when you do “Corp to Corp” and someone pays your LLC, it is up to you what to do with that money and how to account for it. That is where the tax advantages can be big. But be sure to talk to that accountant and get your tax payments in order.

Same here. When I finally did incorporate, I did use a local lawyer who does everything for $300 and walked out with my documents and EIN. Took about an hour. Said lawyer also allows use of their office address as the official contact and weeds out spam/scam official-looking letters.

I do my own accounting, it's not exceedingly difficult if you use e.g. TurboTax, but it does take time that you won't be billing for. If you don't use an actual accountant, you probably want to be pretty conservative with writeoffs, deductions, etc. I have a lot of physical inventory and hard purchases, so that makes it more straightforward.

Do be aware that all the stuff about having a corporate veil to protect you is basically nonsense when you're one person with a corporate entity. I know folks who thought that was protecting them, didn't have professional insurance "because if they sue the company it won't come down on me," and found out that yeah, that's a super easy veil to pierce.

>got professional insurance

Can you recommend some companies that do this?

Edit: Oh wow, I just made an online quote and it comes down to about $500/year. Dirt cheap for having peace of mind.

Check the policy terms.

Definitely this. I went through a local insurance agency. I'd had experience with them when getting commercial insurance on one of my trucks (box truck used for transporting equipment to and from customer sites) and had a very positive experience in dealing with them.

Do be weary, many insurance folks are individuals who decided they were going to sell insurance, took some minimal training, and are basically involved in "insurance" pyramid schemes like selling annuities. Source: family doing that stuff

The "have a company" route isn't necessarily a magic bullet if you're not working with multiple clients.

One of our clients (a Fortune 1000 company) had a program to weed out mis-classified contractors (individuals who really should have been employees). They demanded proof our LLC wasn't just contracting with them. It wasn't a problem for us, fortunately, but the one-man shop w/ a single client might not have fared as well. (It's also unclear to me why somebody would do that, but that's another topic...)

This. I run a sole proprietorship LLC for platform engineering consulting services.

I’ve had CA companies give me a hard “no” until they learned I was incorporated in AZ, living in AZ, and that a majority of the work would be performed remotely from AZ.

As I understand it (second hand from these companies) they open themselves up to liability under California labor law if it’s later determined that contracting/consulting work was “misclassified” and “should have been employment.”

I don’t personally know the reason for this, or what the liability is, but it seems like some companies are worried about having consultants/contractors later reclassified as employees. Me being in AZ has been the turning point for closing contracts though.

This kind of law exists because companies coerce people into becoming "freelancers", so the company doesn't have to pay benefits and can fire them at will, but then ask the "freelancer" to come to the office everyday, clock in and out in time, wear a badge, work 40h week, etc.

So lawmakers crack down on that, but law is a blunt instrument, and other valid situations can get more complicated.

But believe me, those laws are created 100% because companies abuse the concept of contractor.

I believe you.

I don’t have a stake in it. I’m not in CA and it doesn’t appear to impact me doing business with CA companies.

I imagine it’s a bummer for anyone trying to make their own way on their own terms in that state though. It might just be an unintended consequence, or maybe it doesn’t impact CA sole-proprietorships at all if they know the magic words to say or the right contracts to provide. Or perhaps it’s not as big of a deal as it sounded when they told me.

Just sharing my experience and saying I’m glad I live in AZ based on my limited knowledge.

The liability is that it’s tax fraud. https://www.businessnewsdaily.com/770-contract-vs-employees-...

The 1099-NEC form you receive instead of a W-2 for contractor income even has instructions for how to report your employer to the IRS if you think you've been misclassified as a contractor instead of an employee. I'm sure the IRS carefully investigates all such reports to secure every single penny Uncle Sam is owed in back taxes and penalties.

> It's also unclear to me why somebody would do that,

Because if you "contract" someone and they are later found to not qualify as that you can be forced to retroactively treat them as employees (e.g. pay their health/social insurance, fix your tax reporting about them, ...), it might be counted as tax evasion, ... Details about what exactly the rules are that need to be met vary by jurisdiction obviously.

I meant: Why would someone run a contacting company for one customer? That sounds precarious and silly to me. Having a diversity of customers always made sense to me.

From what I've seen: Acquiring new customers can be hard, and if someone is willing to pay for you full-time it's the easy path to just do that and kind of forget about adding on other projects (and the effort of balancing them etc)

That gives me the willies, personally. Given that contractors have no employee protections (such as they are) it’s even more troubling.

I started contracting because I saw it as a way to get some security. With a job I was effectively a business with a single Customer. Losing that relationship meant losing all my income (and health insurance). One fickle manager or business downturn and I might be in a world of trouble.

Having multiple Customers meant that I could screw up, survive a bad manager, lose a Customer’s downturn, etc, and not be scrambling.

How was this proof to be supplied? It sounds as if this is just a thinly veiled attempt to get your client list. That's confidential information and would have been a hard no from me.

We provided a form K-1 showing substantial revenue beyond our billings to them. I didn’t like disclosing our revenue but we didn’t disclose any client details.

It is not a silver bullet. Most big companies (the ones with the big budgets) will not want to onboard a new supplier if they can avoid it.

Though clients tend to overestimate it, it takes a lot of time, legals, resources etc to get a company successfully onboarded.

And (in response to the OP) in the unlikely circumstance that you do, 9 times out of 10 you will be signing their paperwork apart from minor redlines.

Indeed, I contracted with a company that wanted me to get some insane professional liability insurance, which would have cost a huge chunk of what they were willing to pay me. I told them sure, but I'd have to charge more due to the increased overhead, and then they relented. Point is it could have gone the other way, where they just said thanks but no thanks.

Then it did in fact take a long time to get onboarded, to the point where I didn't even have repo access for half of the contract. The experience wasn't great, and I doubt this company will do the same again.

In the US, usually most established companies want a $1 million pro liability insurance policy, which should only cost a few hundred dollars a year (certainly we’ll under $1k).

Startups..vary quite a bit.

My experience with business customers is that they often have lots of tedious requirements for vendors that disappear as soon as you tell them that they cost 2000€.

Same. I have a personal S-Corp and haven't ever had an issue.

Yes, this is the logical next step.

Yes insurance.

You might need to present some kind of documentation about risk management and security policy. But not always.

Some orgs will balk at bringing a new supplier on, but if you’re dealing with a capable operator they’ll find a way to get it done (ie tick right boxes without getting actual procurement involved)

Good luck, it’s worth it!

I contracted for a company once and know another guy who does a lot of freelancing. I was W2 for the contracting company but the company did a lot of work with contractors.

GET AN LLC. Companies are a lot more willing to work Corp to Corp. An S-corp along with the LLC will allow you to pay yourself a salary. Even these middlemen are a lot happier working Corp to Corp, and should give you more wiggle room. Nobody likes a 1098-T worker. If you're concerned about anonymity, getting a corporation in New Mexico allows you to create a corporation relatively anonymously.

Poster is in the UK (or Ireland). Recommending going to New Mexico sounds funny :)

The same points apply, most it contractors (and there are many in finance) have an LTD. Never met anyone working as a sole trader. IANAL but most of the liability gubbins falls away too, since you and the company are legally distinct entities.

In the US at least, a sole proprietorship/single-member LLC doesn't do much to shield you from liability. You can't really say "it was the company's fault!" when you are the company.

But it provides a strong backstop against the consequences of liability. E.g. if your house and your car aren’t assets of the corporation, they can’t be seized and liquidated to satisfy debts or settle litigation.

IANAL. Yes you absolutely can, the whole reason why businesses should NOT want to do businesses with an LLC and why you have to put the letters LLC/LTD on letterheads etc is because the person you are dealing with will have no recourse to assets beyond those owned by the corporation.

You don't go there.

https://cindysnewmexicollcs.com/

Maybe he should do it, as ridiculous as it sounds. Going from a place called "Stratfordshire upon " something to ... the NM or better yet, AZ! Imagine the adventure.

I did it. From the same area as OP, I traveled and worked as a freelancer for several years before settling and starting a business in Vietnam. I've been doing it as a sole trader and never experienced any issues but maybe that depends on the area (setting up an LLC is probably good advice though).

It's not for everyone of course and there have been hardships. But this has and continues to be the adventure of a lifetime. When I hear about people working a decade in an office and then think about the last decade that I lived I would never change it. Stability is overrated.

Bonus: I have way more personal savings and investments than I could have had by staying back in crazy expensive Europe.

Side note: the only time I had a frustrating experience as a freelancer, from a legal perspective, was when working for a UK company. The UK seems to have a crazy amount of rules and regulations around this. Fortunately I was able to get out of the project within a few months and I made a personal rule of "no UK clients from now on".

UK web dev freelancer here. I think it very much depends on the kind of organisations you want to work for. I went solo in 2016 as a self-employed person and never had any trouble accessing clients, who in my case are typically a mix of small digital agencies and small non-technical businesses with no in-house technical resource. I incorporated a company last year in order to firewall my work from my personal affairs, and you may find some companies that will only work with limited companies, but I haven't had that problem so far. If you want to work for big corporations I expect you will run into such issues or the problem you describe yourself. However it's definitely worth approaching different shapes/sizes of business. As another commenter mentioned, you should definitely be aware of the ramifications of the IR35 regulation as this will probably shape the sort of work available to you. Some people work with "umbrella companies" in order to be able to fit better within the constraints of IR35.

All told I've never looked back after ~7 years of doing this, and while job security can obviously be an issue, the comparative flexibility and freedom over your work/life balance etc more than makes up for it. Good luck!

Some people work with "umbrella companies" in order to be able to fit better within the constraints of IR35.

The point of umbrella companies is for clients to make sure the work falls outside the scope of IR35 while dumping the corresponding massive tax hit and extra paperwork on the contractor/freelancer instead of paying what they're explicitly supposed to be paying themselves. It's basically industrial scale tax avoidance by large clients but since HMRC still gets its tax anyway the government doesn't seem to be in much of a hurry to fix it.

Of course this is the same government - or at least a lot of the same politicians forming a government - that seems to be in denial about the results of the recent IR35 changes while simultaneously complaining about how we have no growth in our economy and we need to support industries like science and technology more. Really? Go figure.

Can I ask, what was your first step into freelance exactly? Was it working with a past client, or something else entirely?

For me, it’s been almost completely personal relationships. Either people I know from school, previous work, or made acquaintance after presenting at a meetup. All of these environments allowed me to demonstrate that I can get shit done.

Part of the freelancer’s job is to maintain those relationships, and often these are people that I want to go get a drink with anyway, so it’s not just opportunistic.

The UK/IE market is skewed due to the legislation that essentially ignores intermediaries and considers whether a freelancer is under management supervision and control, in effect an employee (using an unfavourable tax definition of such working practices). The poison pill is the end hirer is passed liability for ensuring the worker is classed properly for tax. The game dynamics that result is that any large corporation cannot hire freelancers directly anymore for 'knowledge worker' type jobs as the taxman would just do a bulk audit and penalise in one go (rather than in the old days of individually pursuing contractors separately which is not scaleable).

So freelancing only is a reality if you just serve small companies; e.g. do word press and web site updates for a bunch of local businesses, and other ad hoc tech support type work. Big money contracts with large corporations is all done via service provider companies paying contractors through Umbrella or on their payroll.

Interesting, wonder how this situation applies to the US? Some states have similar laws. I know of one case where a contractor that should be an employee is working ultimately for Uncle Sam in such a state.

I imagine it's less of a pressing issue in the US. In the UK, people who are sole traders/true freelancers don't have to pay the same taxes that employers have to pay on salaries (a class of 'national insurance', essentially a form of payroll tax). In this way, sole traders/freelancers are sometimes painted by the media as "avoiding tax" and the tax authorities much prefer to get people in as employees where possible as they raise more funds. In the US, I believe there is a specific "self employment tax" to cover this problem, so I imagine the IRS doesn't care as much.

Note that the tax laws in Ireland are quite different from the UK. There's not really much tax benefit from being a contractor versus an employee.

Have you heard of California's AB5? Essentially destroyed the freelancer/contractor market in CA.

No it didn't. The contractor market is very much alive and well in CA, and AB5 was an obvious clarification targeting contractor-in-name-only type gigs. Of course the main target of the bill, Uber/Lyft drivers ended up getting shafted after the ignorant public passed prop 22, but a software contractor/freelancer would have had no issues passing the contractor vs. employee test specified in AB5.

That's not really true; AB 2257, passed later, fixed some important issues with section 2776.

> Have you heard of California’s AB5? Essentially destroyed the freelancer/contractor market in CA.

AB5 (2019) added a bunch of exceptions allowing contractor designations to rules restricting designation of employees as “contractors” resulting from the California Supreme Court’s application of pre-existing law; either the court decision “destroyed the freelance/contractor market” or nothing did, since what AB5 did was loosen the rules.

Software contractors were not included in the exceptions to my knowledge.

To address your sibling comment, you will have trouble if the contractors work is directed, which it often is.

To address the grand parent, yes I'm aware of it and why I made the post. The work continues in spite of the law. Another wrinkle is Uncle Sam being the plaintiff. Should ask on Lawyer News I guess.

(Am limited to a few comments per hour, so need to conserve them.)

> Software contractors were not included in the exceptions to my knowledge.

Software contractors don’t have their own special exception, but would often fall within the Business Service Provider exception; some software contractoes (web designers hired through referral agencies, specifically) would fall into the exceptions for certain workers hired through referral agencies.

And, of course, because of the Supremacy Clause, direct relations with the federal government are not governed by state labor laws, in any case.

Not true, the Dynamex ruling was only applicable to wage orders by the Industrial Welfare Commission, and AB5 expanded the applicability to other aspects of labor law.

Get a copy of this book:

https://amzn.eu/d/4pq5X0M

And you'll gain an understanding as to why companies are doing it. The companies are covering their arses as much as possible because there have been instances where they've also been stung when the contractor has been caught out by the tax man. The middleman company is basically playing the role of insurance for the corporation.

The author also runs this website which you might find useful:

https://www.contractorcalculator.co.uk

Please always paste the name of the book/author as courtesy for the readers. Some try to avoid driving to amazon as much as we can

It is: Contractors' Handbook: The Expert Guide for UK Contractors and Freelancers (3rd Edition; 13 Nov. 2017) by Dave Chaplin (ISBN-10: ‎1527216039; ISBN-13: 978-1527216037)

my bad, will make sure to do this next time

UK HMRC wants to eliminate non-PAYE employment and has been trying to do so since around 2003. This has proved difficult for them since contractors/consultants are often not just working as contractors to try and reduce tax, some of them are, y’know, trying to build a business and gain freedom from the 9-5. The most successful strategy for HMRC has been to fine employers for employing people as indy consultants who would otherwise be classed as on the payroll/PAYE types. These umbrella companies/3rd companies insulate the employer from some of the “risks” invented by HMRC to them.

I’ve heard the issue in the US historically has been tax related. Some freelancers didn’t pay their taxes and the government went after the hiring company. Also business insurance is another line item that certain freelancers never invested in and companies seem to want to have that from all their vendors. Get a LLC / S-Corp if you’re serious about wanting to freelance

The benefits of an LLC are already worth the paperwork, so I highly recommend this to anyone with a significant amount of income outside of traditional employment.

What are the other benefits?

I had a company insist I carry employer practice liability insurance (epli, iirc). If my employees sexually harass someone, or get fired, there may be lawsuits, and epli will supposedly cover this.

I'm a single person company. I have no employees. More than a couple insurance brokers I contacted said "we don't have anyone who will write an EPLI policy unless you have employees".

Contracting company was insistent I had to have it. But... if I didn't want to get it, I could w2 through them. I bought the insurance anyway (expensive, though I've since found cheaper options for it). I had done w2 through them before and ... I'd forgotten how much taxes get withheld - months without having access to my money or ability to pay my own taxes. And... they messed up some paperwork filing a year before which took ... my own time/money to correct.

IR35. This is a UK-specific problem. I can't speak about the Republic. HMRC (the tax office) has a rule that was intended to stop people gaining the tax advantages of being self-employed while actually being permanently employed on repeating contracts. Over the years it has expanded in scope, and a change a few years back meant that the company employing a freelance was responsible for determining if they were actually self-employed or not. If they are later found to have wrongly determined that someone was self-employed, they are responsible for the back income tax. This pushes them heavily in to passing on the responsibility to someone else, in this case the middleman company. There are other complications, but that's the basic story. And no, setting up your own personal services company is not a solution.

- Incorporate. In theory, if still an issue, get a bit of liability insurance and whatever else to boost your internal + external reliability ratings...

- .... But I'm guessing that's not the problem. It can be you and they are being polite, or more likely...

- A LOT of companies have hiring freezes & budget cutting they don't want to announce -- even if they are publicizing open roles -- so new expenditures only happen in very special areas. And indeed, UK is indeed particularly bad right now: Brexit + the war. OTOH, freelancing can be your in to other teams who can't otherwise get headcount, so some finesse may work too.

Point one feels like table stakes for doing freelancing seriously. The third point is also very important. If there is a hiring freeze or other budgetary issues, they may still be able to pull contractors in through existing agreements with other firms. Plus those firms have already gone through the procurement process which covers legal agreements, etc. So instead of having to go through that full process again (which can be extremely time consuming in some organizations), it's much easier to funnel freelancers through an agency with whom they already have all the arrangements and agreements approved.

From the businesses point of view, would you rather deal with a couple larger providers or manage individual contracts and relationships with potentially dozens of individuals?

UK has some misc panic around IR35 still.

I found companies were much more willing to be invoiced by a limited company than by an individual, though setting up and maintaining that company is a hassle.

To be clear, in the UK, setting up a Ltd company is incredibly simple and easy to maintain.

It costs £12 and takes about 20min to create. Then you get a bank account with startling/monzo which is very simple (easier than high st banks). All tax is done online which again is fairly simple. Sign up for freeagent (or another accounting package) and just keep on top of your accounts. When it comes to filing your annual accounts and confirmation statement, again its all incredibly simple and can be done yourself without the need for an accountant as you'll qualify for mico-entity accounts and freeagent handles it for you. Or you can pay roughly £1200-£1500/yr to an accountant and have them do it for you.

Its honestly not hard at all, happy to answer anyones questions on the matter.

> Or you can pay roughly £1200-£1500/yr to an accountant and have them do it for you.

Any half decent accountant will probably be able to SAVE you more than this; mainly by optimising your tax affairs (assuming you have a modest turnover).

It's money well spent.

That doesn't help with IR35, as the law looks at the practical situation of the individual and not the formal situation to determine if they are really an employee.

Basic tests for IR35:

https://www.brooksonfaq.co.uk/knowledge-base/what-are-the-ir...

It's obviously a minefield, especially substitution. If you're being hired for specific niche in-demand skills, why should you be expected to provide someone else?

What seems to happen in practice is the Revenue occasionally has a spasm and decided to investigate a selection of freelancers. This ends with a lot of confusion, plus various tribunals and court cases, because the reality is not clear and many freelance situations can be argued either way.

The simplest option - not infallible, but very helpful - is to have multiple clients and work mostly from home on fairly short projects. That makes it very hard to argue that you're an employee.

If you're on-prem and exclusive for an extended period for a set number of hours, supervised by management and using equipment supplied by the employer, it gets much harder to convince a court that you're genuinely freelancing.

And as long as you're running a proper business with multiple clients, your own equipment, your own hours, etc, then you dont fall foul of IR35. If you are however basically being treated the same as a PAYE employee would, 1 client, their office, their equipment, their hours, their conditions, etc, then you're dodging tax and thats the point of IR35.

As long as you're running a proper business you shouldn't fall foul of IR35. Sadly that won't stop a lot of risk-averse large clients insisting on paying you through an umbrella company. And it won't stop many other clients from insisting on money-costing and time-wasting IR35 assessments so they can take out insurance policies. And even if you don't have any of that to deal with it won't make you feel any better if HMRC decide for any reason to launch an IR35 investigation that will eat a shocking amount of your time and money even if you are eventually found to have done absolutely nothing wrong. All of this risk has a chilling effect on this whole sector of the economy.

Even if they're determined to keep IR35 the government could at least clarify their intent for people like contractors who work with a single client but for a limited time. Right now I have the sense from my own network that there are a lot of games being played in that sector to try and avoid being caught by IR35 because no-one really knows if they're supposed to be. If the government wants to charge people who are working as flexible labour through a PSC the same taxes as permanent employees then they should at least be honest about it and accept responsibility if that flexible workforce then shrinks and economic damage results. Or if they want to incentivise the flexible workforce then they should give clear guidance on how long is considered to still be "temporary" and won't be treated as disguised employment (even though the "employee" probably lacks any of the job security and benefits of a real employee as most contractors do) to remove the risk for many genuine short-term workers and increase the efficiency of the contracting market.

And we're only seeing it from the IT sector point of view. IR35 also wrecked the HGV driver market and is one of the reasons for the shortage of drivers.

What are the ramifictions of a company that hasn't earned during a tax year? Are you still expected to pay anything at the end of the tax year (at least in terms of a salary to yourself)?

What pjc50 is correct, but might help to be more specific. If you literally mean its had 0 revenue and 0 expenses, then its basically a dormant company and you can file so.

However, if you've ran the company in previous years, even if you've taken a year off and had 0 incoming revenue, you may have other taxes to pay. There wouldnt be any corporation tax as theres no profit, but you may have some very small expenses like bank fees, maintenance of servers, subscriptions, etc that might be left over. So you wouldnt be dormant, you'd be a loss making company, but still active.

If you had a big chunk of money in the biz bank account and still paid yourself, there would be taxes on that, both on the company and personal side depending on how you paid yourself.

I wouldnt recommend setting up a Ltd company to literally do nothing with it though, 0 revenue and 0 expenses, you're not really benefitting for any reason.

You're not required to pay yourself anything in particular. If you do, then you have to pay NICs and tax; you may want to pay NICs even if you're not earning for tedious pension reasons, but that's not specific to the company structure.

You still have to file accounts even if that's just one page of "income 0 outgoing 0", for which there is a charge of £13. https://informi.co.uk/business-administration/filing-your-an...

Can you do that as a foreigner (to the UK)?

Yes, but opening UK bank account is not that easy without your presence there.

Thanks for the info.

This is the reason.

If they contract with a freelancer directly, and that freelancer has no other gigs, then the freelancer will be considered as another employee for tax, benefits and liability purposes.

If they contract a freelancer from a consulting company, the consulting company takes the employment burden.

You can get around this by creating your own company, but there are lots of complications for it.

I'm not sure if they still exist (been a while since I did this) but you used to be able to join an "umbrella company"[0] which was set up and managed by an accountancy firm and employed a small number of contractors/freelancers, which worked well.

[1] https://en.wikipedia.org/wiki/Umbrella_company

It's doubly ironic as IR35 is specifically designed to ignore limited companies etc and force people into "employee" status despite them...

I started off as a soloist in the government contracting space which is a bit of a different beast.

But, I would focus on business development efforts where you have a good existing relationship with the customer and if possible, the person who had enough pull to make the admin weenies and middle management bring you on.

In government consulting, that would be the program manager for the contractor.

I’d also focus my efforts on companies that have previously brought on independent consultants. In your case maybe web development agencies. They will take a cut, but you can use that to get relationships with the end clients too.

You might want to do a little business admin like form an LLC and such but prioritize getting leverage via relationship building with potential clients and identifying companies that you know work with soloists.

If you happen to get in the government contracting world I wrote a book on the topic. A few people who are not I. The industry have found it useful for general freelancing/consulting advice as well.

https://1099fedhub.com/

I don't know the reason in UK/IE, but in the US sometimes they want me to have at least an LLC so that it is clear legally that they are not just pretending I'm a contractor in order to avoid labor rules. If it's a contract between companies, even if one of them is a company of one (me), that satisfies their legal department that I won't come back in a year or two and say "hey, I was actually an employee and you owe me stock options that you gave to other employees", or whatever.

So, I have an LLC, and if the company wants to use that, they do. Not everybody requires it, but I notice that the ones with a legal department are more likely to.

Not saying that's the issue in UK/IE, but it may be something analogous. To prove (to them and the gov't) that you're actually a freelancer, perhaps you need to make your own company? IANAL, just an idea to check into.

There are plenty of gigs out there but finding them when you're first starting out is difficult.

I've freelanced about half of my career and ~80% of my gigs have come through my network. Sometimes I'm referred by friends and acquaintances and sometimes by people I've done work for in the past.

I've grabbed a few off of the monthly HN "who's hiring" thread, there are often a ton of freelance gigs in there.

I work primarily in startups, though, so YMMV at larger organizations.

If you have questions, feel free to E-Mail me.

This might be related to the legal change for IR35, which is intended to prevent companies pretending that their employees are freelancers and thus making their situation more precarious against their interest. A bunch of companies got the wind up about the legal and tax liability and so are dealing with contractors in a more restrictive way. Others are still using contractors and just need to make sure that the legal situation is clear.

Have a look at https://www.gov.uk/guidance/check-employment-status-for-tax

Suspect it's more a case of "we're not interested in your unsolicited offer" than any absolute refusal to contract with individuals (or Ltd company representing an individual) ever. Companies aren't exactly short of people contacting them offering them development or marketing work

Smaller customers are often happy to hire a freelancer directly without the overhead of going through a middleman - as long as they trust the freelancer. Larger organizations tend to prefer hiring consultants through agencies since it is simpler and reduce risk.

I worked as a freelancer for years and liked it, but in the end I decided to get attached to an agency because there is a lot of footwork in finding your own clients and negotiate, and I didn't particularly like this part of my job. Now the agency finds the project and I just say yes or no and start working. I also earn more even after the agency cut because they are better negotiators than I was.

I wouldn't accept a contract which said I should be on-call for support after the project finish. I only accept full-time contracts, and when it is finished, it is finished. Otherwise you go crazy supporting old projects while at the same time working full-time on a new project.

Some level of non-compete is reasonable. Like don't get hired directly by a client which know you through an agency. This would be undercutting the business model of the agency.

I think it's like any job (or practically everything in life). It's about who you know.

I'm a game dev who's been freelancing for years. All the work I've done has been through friends and acquaintances and people I've met at industry events n stuff.

One: I freelance and have for my whole career. However, I work for small companies. I have largely supported myself that way for a long, long time. Companies that are twenty or thirty million bucks need software. They do not have the 'only work with corps' mentality.

Two: Get yourself an LLC anyway. I recently had a tax situation that requires incorporating. I'm kicking myself up and down. There are meaningful tax benefits to using one. Also, it creates a 'corporate veil'. In principle, a true freelance can be sued over the work that is done. If a corporation is involved, you can't. Creating an LLC with a small town accountant costs a few hundred dollars and is easy.

Depends on where you are. California LLCs are at least $800/yr and AFAIK don't give you much of a veil.

This is my experience too in the Netherlands. I do sporadically hear stories of people initially being hired through a recruiter, then leaving, then coming back as a true freelancer. It's a sad state of affairs because these recruiters add very limited value. They basically try to match every freelancer with every position and leave all but the most basic filtering to the recruiting process. All while extracting a hefty percentage, often for the whole duration of the contract. Supply-demand matching could be done more effectively through a web application, but recruiters seem to be thoroughly entrenched.

IR35 scared a lot of employers away from individual freelancers. The fear is that HMRC could audit you, retroactively declare you a worker and then demand national insurance contributions from the employer. They're happier working with a company that [supposedly] insulates them from this.

And cover. I know the companies I have long term contracts with are petrified of the day they might have to find a replacement. It might not be true in practice but they believe a third party management layer gives them cover, and at a lower cost than hiring two of me at once.

I can't quite tell if companies you're trying to work with are locked into some exclusive provider contract with a firm or not, in which case there might be no way for you to work directly with them.

But you might have better luck approaching companies as a consulting firm rather than a freelancer.

Create a website for yourself to use for business as a small consulting firm.

Then approach the same companies offering the same exact service: you instantly seem more credible.

Make it clear if asked that you're not the freelancer. In fact, you can tell them you have a pool of expert freelancers and consultants ready to go for their own projects.

> In fact, you can tell them you have a pool of expert freelancers and consultants ready to go for their own projects.

Don't lie. There's no need for this one, anyway. If your company presents as professional and competent, people will assume this. What you need is for your company to get a couple of initial gigs, and to get permission from the clients to mention them in marketing efforts. (That's the hard part, and it can take time if you're starting from zero. But it's only hard at the very start.)

Then do that. Potential customers aren't thinking "I wonder if they have a staff", they're thinking "I wonder if they can do the job properly". Being able to point to prior happy customers goes a long, long way.

It's not a lie unless you word your statement very poorly.

You have the exact same access as other consulting firms to 3rd party websites to find freelancers, if needed.

Do you know what these firms often do? They take any paid jobs they can get even without having the staff in place to do a project. If they need extra help, they scramble to find people at the last minute.

> It's not a lie unless you word your statement very poorly.

It is entirely possible to lie without uttering a single statement that is technically untrue.

Most companies don't care whether your company has one employee (you) or a million. So it doesn't matter whether you call yourself a freelancer or a consultant or a contractor or anything else. What matters to them is whether the entity they will be contracting with is a person or a company.

And as others have pointed out, this is usually for tax reasons: if the company contracts with an individual, the company is more likely to be viewed by the IRS (at least in the US) as your employer, and are thus subject to paying unemployment and payroll taxes.

Where does it go from marketing to lying?

“Make it clear if asked that you're not the freelancer” is that point.

I'm not sure if it even crosses over to fraud: “Material Misrepresentation means an act of intentional hiding or fabrication of a material fact which, if known to the other party, could have terminated, or significantly altered the basis of a contract, deal, or transaction.”

> “Make it clear if asked that you're not the freelancer” is that point.

What's the actual difference between a freelancer and a consultant?

If you call yourself a freelancer, you're a freelancer.

If you call yourself a consultant, you're a consultant.

You're not a freelancer by virtue of you labeling yourself as a consultant.

How is it a lie to say you're not a freelancer if you're calling yourself a consultant?

There's a difference between deciding whether you're a consultant or a freelancer today, and deciding that you're an agency of multiple people trust me bro I'm not even the freelancer that might be assigned.

How is it a lie to, if asked, say that you have access to a pool of consultants and freelancers? Is this not true?

It might be a lie if you say "I've worked with them 20 times before and trust them with my life and they're all currently on my payroll" but that's not what I suggested to say.

You can argue how many grains of sand make a pile, but that vagueness doesn't mean that one grain is a pile, especially when you _know_ and are _banking_ on the other party not sharing that meaning.

As soon as you're saying something that isn't true.

The guidance to "present yourself as bigger than you are" isn't bad, but it's not going to take any adult long to figure out that the same guy who responds to technical questions is the same one who submits invoices and receives tax paperwork.

That sort of "fake it 'til you make it" manipulation is part of the value that these middlemen provide. The hiring company gets a disposable individual contributor and the middleman puts up with silliness like what's described here.

If someone lied to get your business then you can be confident that they'll lie to keep it.

Mostly it's a way for their HR team to have fewer vendors to deal with. That means less administrative overhead and potential risk compliance issues for them to deal with. I agree, as a worker, it sucks.

I’ve not had this experience in the U.S. I’m a platform engineer providing consulting services. Folks have said they see a clear ROI on my services and I haven’t experienced a shortage of customers yet, certainly nobody turning me away because of my sole proprietorship LLC. Freelancing appears to be alive and well here.

Sometimes my “employer of record” is a 3rd party strictly for their administrative services. In these cases the company I’m consulting for isn’t setup to pay consultants and offloads the legal and administrative work to a 3rd party. But other than the name on the check, the experience has been the same for me and I’ve negotiated the statement of work and contracts directly with a member of the hiring company, the employer of record just verifies everything is on the up-and-up.

From my understanding this isn’t true everywhere in the U.S. though. I’ve been told by a few clients that California and a few other states have locked down contracting. From my understanding a contractor can be a liability in those states because the work performed can be reclassified as “employment” down the road. Not sure if this just results in fines, backpay, or lawsuits, but I’ve had many CA companies flat out tell me “no” until they learned I was incorporated and living in AZ. This is all second hand though - I just know me being in AZ has been the turning point in closing contracts with CA companies.

Go through the third party still but ask for flow through rate. This typically is ballpark about 5%. Whenever I find the work or it finds me without the help of a recruiter I demand this.

What incentive do these companies have to circumvent their standard hiring procedures for you? I freelanced for nearly a decade. My guess is that they’re just not that interested in you. If you bring something valuable to the table, they will go out of their way to hire you as a freelancer directly on your terms. If you go to them and say “hire me, except FYI I’m working on my own time, schedule, and fee structure” but don’t bring much much more to the table than their FT folks, why should they?

Why are you against platforms? They give both sides some trust.

I work with a few freelancers: a friend of mine, a guy i met on a platform (and we decided it's not necessary to do follow up business through that platform) and freelancers on a platform.

If I get a cold email no matter how warm and personal they're trying to make it sound I'm assuming it's from someone who emails 1000s of companies and the email goes to spam, even if I need such service because spam shouldn't pay off.

Platforms take rent

and provide value

As a hiring manager who has a number of contractors, having a handful of vendors we work with, with a limited number of timesheet approval systems, invoicing, etc makes life easier for me. If we can bring another contractor on the same terms as the last one (so we don’t need to get legal involved), same payment systems, knowing that insurance is adequate takes a bunch of work out of my day.

It doesn’t have to be a big body shop - most recruiters have a contractor management platform with timesheets and invoices. At the start of last year one of my QA team moved overseas with her family, and we were keen to keep her on, so we hooked her up with one of her favourite recruiters to sign her on as a contractor. The overhead we pay recruiters for contractors is considerably less than a bodyshop.

Onboarding new vendors is a massive pain in the bum for enterprise-grade companies - there’s a bunch of work that needs to happen around proving bank accounts, business credit checks, etc - it makes sense to avoid that by using known vendors when all else is equal.

Generally bigger companies have requirements surrounding things like insurance, etc.

Sometimes if you push hard enough and the people want you, they'll tell you the requirements etc. You'll need to talk to the finance group etc. to make sure you comply with any requirements. VMWare wanted $30M in cybersecurity insurance. It wasn't cheap to buy, but worthwhile based on the size of the contract.

I have worked with several US & European companies as freelance / outsourced resource. Had to sign some documents confirming that I am not the resident of clients' countries. There were no issues whatsoever in payments or anything else.

Maybe it is your tax status that's causing the issue. Have you considered forming an LLC (or equivalent in your location) and applying through it?

It is like buying Oracle or IBM. Companies really like to hire companies like Tata. Why? Because managers are like this. I don't have a better explanation. Best advise I got for you is to find a 3rd party (or couple of 3rd parties) that have good clients. It worked out very well for me. Working with 5 of these and I have a continuous stream of consulting work.

> "No. We cannot hire freelancers directly. You must go through a third company (consulting firm/body shop) which we work with."

But why the heck would I even consider doing that? The whole point of freelancing (at least IMO) is being _free_ from the middlemen.

So(at least in Ireland, where I'm based) this is an issue with the taxation authority. I'm currently fake contracting (company has no EU based entity), but the reason that they generally want a legal entity is to ensure that all your tax gets paid, as otherwise the company can be held liable for the unpaid tax.

I currently work with fenero.ie, and pay them 130 per month (which comes off pre-tax income) to use an umbrella company which deals with accounts, registration and taxation for me.

I _think_ that you could set up a company yourself, but if you're just getting started I'd recommend using a middleman for now.

I think the body-shop approach through a middleman is where most people start, but figuring out how and when to move on from that is trickier.

Look at it from the other perspective. The point of hiring freelancers is usually either,

1. Not going through the full hiring process, especially culturally.

2. Hiring someone who wouldn't want to stay at the company.

Point 2 is where your typical definition of freelancing fits in - you're a superstar who can't fit on their payroll.

For point 1, most companies just rather pay a company to do the vetting, onboarding, offboarding, managing, HR. It's often just throwing money for manpower.

The more well-placed a company is, the less likely point 2 will happen. These companies can afford whatever prices and benefits the superstar wants. Hey, I gave up freelancing to settle at a company.

So you end up freelancing for small and mid-tier companies, or something like Fortune 500 corporates who have good money but end up dead end jobs.

In the past I found freelancing in the UK highly dependant on personal network. I believe it is possible to find work if you know enough folk who are happy to work with freelancers. I built my network by attending interest/tech based events and networking.

An alternative might be contracting but these usually require setting up as a LTD, getting insurance, etc. you’ll also have to deal with corporation tax and other admin. The work you’ll get is more or less the same as perm work but with more risks (usually 3 or 6 month contracts, you’re the first to get fired if things get tough)

However day rates in excess of £500 are normal outside of London (£750 in London) so if you can deal with all that it can be lucrative. I use 220 as the number of working days in a year which can put your income north of £100k (ymmv).

Hope that helps, and hope you work it out.

However day rates in excess of £500 are normal outside of London (£750 in London) so if you can deal with all that it can be lucrative.

Of course that depends on the type of work you do, your skill and experience level, and the type of client you work with.

In the UK what that day rate is worth also depends on whether you are working inside or outside IR35 and if inside whether you're working through an umbrella company or the client is paying their own taxes. Your £750 and your friend's £750 might give you very different amounts of real money left after taxes and costs.

Lots of already good answers (get an llc/incorporate). To answer your question, yes there is still freelancing going on! But you should know and understand that the atmosphere and general (as a business) outlook towards freelancing has largely turned sour over the last 15+(?) years with the rise of the gig economy and the increase in remote freelancers from ALL over the world.

From your story, I think you're best bet is to incorporate and do work under a company name to freelance, yes its ironic in a way but the game is the game and guess what? That's the game you'll have to play in this day and age. Plus not even mentioning the numerous benefits to incorporation (although I speak as a US-centric). Anyway good luck! No better time to freelance tbh

After reviewing a number of freelancing sites, I decided to build brainpick.co.uk a Stackoverflow for Enterprise. This is a Q&A platform, where you are asked to submit your answers and you get paid when the customer accepts your answer. Now the why part. First of all, there are many experts with no marketing and sales skills. These skills are essential with standard freelancing sites. On the other hand, customers get access to a pool of experts, they may not afford to hire. The pricing is fixed, so this might be another positive feature for customers. As the workspaces are private, I am thinking about to require signing only NDA. Let me know your thoughts.

"No. We cannot hire freelancers directly. You must go through a third company (consulting firm/body shop) which we work with."

I was told the same. Try reaching out to smaller companies or find a connection either with executives or who can introduce you to them.

> You must go through a third company

Pardon me if I'm ignorant about the situation, but could this simply mean that they just want a business entity and not an individual? It makes it easier for them since they don't need to deal with verifying your employment eligibility, issue you 1099s, IRS reporting, worrying about hiring discrimination lawsuits, gig worker lawsuits, and all that mess. Paying a company for services doesn't require anything other than wiring money and getting a receipt from that company.

Figuring out the expense record-keeping and tax stuff becomes your responsibility (rightly so).

If this is the case, you can register a LLC and be a 1-person business, and that would solve their problem.

The real reason that only a couple have touched upon, at least in the US, is because in the last 20 years the tax rules changed. The IRS put the onus on the hiring company to pay taxes if the contractor didn't pay their taxes. That's a huge burden, which is why most larger companies will go with well known companies that can take on that liability. 20 years ago, this didn't happen so it was easier to hire a single contractor but now the tax liability has forced many companies to change their policies permanently to only hiring from larger contracting companies that can ensure that taxes are paid.

Just as a data point... I work with an independent contractor in Europe (one-person business) who is directly hired by the U.S. software company (large, but much smaller than FAANG) that I work for. The contractor is paid directly via wire transfers from the company's accounting department.

I also have a friend in the U.S. who has been running a one-person consulting business for decades.

Both of these people operate as their own businesses and negotiate their own contracts. So freelancing does still exist out there.

California's AB-5 [1] is one issue. It basically says the independent contractors that are working on your core business are employees not independent contractors. This makes California companies very hesitant to use one person shops.

[1] - https://www.ftb.ca.gov/file/business/industries/worker-class...

In the US, the correct answer is to create an LLC and contract through that. It simplifies the tax relationship and reinforces the distinction between contractor and employee. But the LLC needs to have more than a paper existence. You need to have a separate bank account and bigger contracts/companies may require "errors & omissions" insurance but that's later down the road.

I'm not sure what the UK/IE equivalent is but I'd recommend looking into it.

One approach that works: offer your time to those in need for free. Your natural talent (and time management) will present itself without financial strings attached. Those people you help turn into potential clients and word-of-mouth advertising for your abilities. It's networking 101, but in my experience the most fruitful path to freelance consulting, advising startups, part time or moonlighting work that balances against a full time gig, etc.

The bigger companies don't want to deal with freelancers directly. It's too much work to vet every freelancer's company, go over the contract etc. That's why they buy freelancers in bulk from their list of approved middlemen companies, such as Manpower. Startups, on the other hand, usually hire firelancers directly - they're too small to have a streamlined, heavy procurement process in place yet.

i never heard the purpose of freelancing being free of middlemen, its being free of a direct employee relationship and having a middleman does not mean you have to be employed by them, only that the contracts, accounting, invoicing, and payments go through them. in my experience this is mostly a function of how big the company is you want to work for, startups to mid size companies are completely fine and possible to do directly as long as you trust their payments be reliable, certain clients might make sense to take the 10% to 20% cut just to not be in risk of running after your money, but usually its better to just not work with such clients. companies after maybe a few 100 employees and 10+ freelancers don’t want to deal with individual contracts and outsource ramping up and down, freelance recruiting etc. at this size they still pay so much more than small startups that freelancers get a significant extra. the only exception i know are absolute superstar consultants with an own brand around their name, personal friendships to the relevant managers or niche skills that are so specific that the agency they use cannot provide them.

A former employer had to comply with a variety of federal hiring compliance rules. Any contractor they hired also had to comply with these rules. Thus we could only hire contractors from pre-vetted contracting companies as it was seen to be too much risk otherwise.

Exceptions were made for very unique skillsets, but unless one is in the range of several K/hr, it is unlikely they'd fall in that bucket.

Having been a recruiter in a previous life, I know that some companies specifically force third parties into the relationship because it helps managers weed out other recruiters. Instead of having a dozen people blowing up your phone on a daily basis, you can simply tell them that we're not gonna work with you because we're contracted with this other party for staffing purposes.

I've done a ton of freelancing with US companies over the last decade (I'm in the US) and have literally never had anyone ask for this.

You'll find almost no big companies are going to deal directly with a one person shop. I used to be able to do it all the time, now they a) don't want the hassle of dealing with a 1-person company, and 2) they don't want the risk of having you reclassified as an employee after they have been paying you as a contractor - you can thank the IRS (in the USA) for that one.

> they don't want the risk of having you reclassified as an employee after they have been paying you as a contractor - you can thank the IRS (in the USA) for that one.

Can you or anyone who knows provide more context about this? I had no idea this was a thing, how recently did this become a thing?

https://www.irs.gov/businesses/small-businesses-self-employe...

It's always been a thing, but it's been a very high profile thing when it turned out "ride share" apps actually had a lot more control over the drivers than they should have.

Look up "permatemps" and you will see articles going back decades about companies using contractors that are actually some other company's w2 employees.

I found my current job on Upwork, and after a couple of months we moved to a direct arrangement. Not ideal, but it can work.

Open your own shop. Start sending sales letters and networking. Hire a sales copywriter to pen your letter and call everyone who received a letter. You will get clients if your approach / proposal are aligned with their interests and goals. And you can repeat this every month to grow.

we can't/won't onboard individual contributors and it is a pain. If you can set up a company, like a LLC or something, we can onboard. It sucks and costs us way more in overhead but these are them rules.

But as other said, only hiring companies instead of individuals protects you from potential lawsuits around social fraud.

In a certain range of company sizes, this works. I have been contracting since 1998 and have had a C corp since 2000. I'm currently doing work for a Fortune 100 company and they were quite unwilling to hire my company; I have to work through an agency as an individual.

My experience is that when a company is big enough to have a legal department, they invent a bunch of terrible scenarios and then create policies to protect the company from the things they imagined. Yes, there can be real problems hiring contractors directly (but I think it's fairly rare), and it's a lot easier to have one or two agencies that you pay instead of dozens (up to thousands like the company I'm working for now) of separate contractors.

Billing the big corps (when it's possible to contract corp-to-corp) has been a pretty awful experience too. Adobe wanted to see my company's client list, tax returns, and marketing materials AFTER the work had been done, for an invoice under $20k. I said no, and it took over 2 months to get them to pay. That was a while back though, so maybe things have changed.

Why did they want to see your client list? Genuinely curious. What a turn-off.

The government changed IR35 so that the onus is on companies to suffer the consequences if they make an incorrect status determination.

Some places will hire you directly as a contracter, but it will be PAYE or under an umbrella company.

I've been a freelance marketer (I do google ads) for 8 years now. The thing that made all the difference for me was building a good website for myself and then buying google ads on keywords that indicate people are looking for somebody like me.

I have gotten all my clients that way.

This is the key. People aren't looking for "freelancers". They are looking for solutions. If you are a "company" offering a "solution" to their problem, they will pay you for your solution.

I cant speak to europe, but in the US yes you can freelance still. It helps to setup an LLC to work under for various reasons, and it takes a lot of time to build out your network, but theres definitely enough work to go around in terms of agencies vs independents.

They want to avoid you having personal relationships, which could transfer into you working around accounting, resulting in good offers and fair prices. What they want for you is to be the lowest bidder, with no horse directly in the company you run with.

In my experience, if what you can provide to a prospective client is genuinely valuable or even unique, arrangements can usually be made. Having an LLC is very handy though, as it simplifies procurement for your client.

I would never work for company that wants middle man in communication. Actually its one of reasons why I'm a freelancer. To reduce wasting of time to get job done.

It works in art/design/film industry.

How is it in California/Bay Area? Anyone still does 1099 directly? What do you do for one-off short term gigs? Form an LLC with all the fees and paperwork that entails? Give a cut to a middleman?

in my experience, small local mom'n'pop business are fine hiring an unincorporated freelancer for cash - big box brands want to work with other businesses, not with individuals.

doing little bits of work for local businesses is essentially the same as mowing lawns over the summer for cash - yes you can make bank doing it if you're smart and diligent, but no it's not really in the same league as working with a professional landscaping outfit.

Still very active in France - in fact I get calls on a regular basis, specifically asking for freelancers. Much more than CDI (which is their FTE).

I know many freelancer own their one-person-company just for the tax / contact purpose. The overhead is quite low, and you don't need a middle-man

In the US most freelancers have their own LLC and technically that company is contracted and pays them as an employee to do the work. Not sure what the equivalent in UK is, but that's maybe what these companies are looking for?

TLDR be your own third party/middleman

I've seen this in the U.S. in the corporate world -- I.e. Look at the third party company they want you to use, and copy what it does to your own LLC. If you can make your LLC appear to be a larger entity than it actually is, (e.g. perhaps hire a virtualized assistant service to answer calls) all the better. It's sort of a compatibility layer.

It's a limited company in the UK and yes, it's absolutely standard practice for freelancers to set one up.

Yes, there always has been and there always will be. It's a fundamental part of doing business,

USA. I planned on freelancing my whole career. The cost of health insurance ended that about 15 years ago.

Start an LLC. Now you're a company

DE and US are pretty open to just hiring people directly as consultants. Must be an UK thing.

When I did freelance all big US companies forced me to go through an “approved vendor”. Most of them offered only W2 and would take a huge 30% or more cut. In the end I found one vendor that only took a 3% cut and otherwise left me alone. I think for the big companies it just makes accounting easier if they go through less vendors.

From my experience in DE, it depends on the company size. Larger enterprises probably will go through an agency, probably to (try to) cover themselves against accusations of false self-employment (Scheinselbstständigkeit).

Anecdotally, the two contracts I had through agencies were still the most lucrative financially, despite the middleman taking a hefty cut, simply because large enterprise pay higher rates.

Even in DE, there are issues around "Scheinselbstständigkeit" if you don't have a UG or something. Most companies prefer to work with other companies, even if those have just one employee.

Start a consulting company. There's no law against having a one person company.

I'm a UK contractor. I'm going to use the word contracting henceforth, but feel free to swap it our for freelancing or consulting, or whatever you think sounds better.

Most companies will want you contracting through a limited company in the UK. The main reason for this is so that the client can sue you if you screw something up. You'll also notice that most companies will ask you have business insurance as well, this again is so that in the event they need to sue you, you're fully covered for it.

The other reason you might need to contract through a limited company or an "umbrella company" these days is because of IR35 regulations. Basically employers can now get screwed by HMRC if they're paying people as contractors who are working in effect as employees. The reason for this regulation is that it's more tax efficient for both you and the client if you work as contractor as you can claim expenses, they don't need to worry about paying you severance / sick pay / etc, and both you and your employer don't need to pay NI contributions on your salary. As you might imagine the government would prefer only the wealthy had access to such privileges so they introduced IR35.

In effect this now means it's too risky for a company to pay an individual for an extended period of time without ensuring things are done correctly. IR35 basically gives companies two options: 1, pay a company for work with no hard requirements on who does the work, the time they do the work, or where they do the work – this is an "outside IR35 contract" and this will require you set up a LLC to contract through. Or 2, pay an umbrella company for the work and that umbrella company will employ you so you can get screwed by the taxman in the same way everyone else does without the benefits of a real employment contract (it's lose, lose) – this is an "inside IR35 contract".

On top of this, companies will often have contracts with recruitment agencies allowing that agency to be the sole recruiter for said company. This means even if they're willing to risk paying you for your services without going through all the IR35 nonsense, they contractually can't because they have agreements in place with recruitment agencies preventing it. I've personally ran into this issue when a client I was contracting for changed their preferred recruitment agency and I was unable to continue contracting with the client without the client first paying off my recruiter due to a non-solicitation clause.

If you want a company to pay you directly (as a self-employed sole trader) you would probably need them to pay you for a product and not for your labour, because if they're paying for labour they need to go through all the regulatory hoops.

Imo there's very little reason to be a contractor in the UK anymore. With all the extra tax headaches, the government constantly finding new ways to screw you and job insecurity, it's honestly not worth it.

What’s stopping you from forming your own “body shop” corporation?

death by paperwork. The reason they are doing this is to minimize paperwork. i.e. only having to pay a bill to a single entity instead of dozens.

I live off of consulting with small businesses. The sweet spot is any company large enough to have regular, ongoing IT/Data needs, but not large enough to have a full-time staff dedicated to the role. This conveniently means that I also work directly with the owners and decision makers, which cuts out a tremendous amount of friction. I don't make as much as someone at a FAANG by a long shot. But I am not starving, either, and I have much more control over my day to day, which is a valuable tradeoff for me.

The tl;dr is you need to focus on smaller businesses first. There is plenty of opportunity there.

Consider them as a Union, Lawyer, and a Agent.

I freelanced periodically over the last 20 years or so, mostly a decade ago doing mobile app dev when it was elance.com/odesk.com/freelancer.com. Some observations:

1) Each freelance service is uniquely terrible. Most are winner-take-all, require excessive effort from both clients and contractors to get onboarded, and push skills tests onto people with years of experience. It looks like it all went to upwork.com, which is fine, but a highly-consolidated service like that will always cater to clients first, because they have the money.

2) Freelancing is the antithesis of setting boundaries. Being an army of one is hard. Each client adds perhaps a 10% chance of you getting called with an emergency months or years down the road. For business types who thrive on sales, that creates a wealth of new opportunities. But for maker types who just want to do important work, the feeling of obligation can quickly become overwhelming.

3) Incentives work against both client and contractor. Clients are willing to pay 3-4 times more for some kind of guarantee that their vision will be realized. Contractors are willing to charge 3-4 times less than the going rate to achieve some semblance of autonomy. These are both contrary to what economics teaches. The result is a race to the bottom on price with increasing marginalization of the contractor's time. The client goes broke over multiple attempts while the contractor becomes an irreplaceable.. commodity.

The market is so saturated now that it's hard to see how things could get better. Then again, google was once the dominant search engine that could never be dethroned. So here are some ways to fix the above dysfunctions, respectively:

1) Contractor-first freelancing. Joining dev teams or getting added to existing contracts should be frictionless. Less vetting, more letting track records speak for themselves. Better ways of breaking down projects into smaller, easily completable subtasks.

2) Anonymous by default. Direct lines of contact are opt-in only. Middlemen would be other contractors performing matchmaking duties, never gatekeeping.

3) Freelancers choose clients (opportunistic matchmaking). Rather than appealing to the sensibilities of the client, who is generally nontechnical, contractors would look for work that's most appealing to them. Completing task A results in payment B, period. No more waiting around for negotiation or money to transfer to bank accounts, just get real work done now and get paid immediately.

I've barely scratched the tip of the iceberg here. Personally, most of the paying work I do revolves around fixing other people's mistakes that I would never make. Psychologically, that takes a toll. It trains the mind to see problems rather than solutions, gradually wearing away one's creativity and motivation. To the point where I've had a gaming PC and Unity all set up and ready to go for years now, but when I go to turn it on to make something to earn a little residual income, I get so demoralized that I just turn it off in disgust. Competition has gotten too fierce. Quality of life is suffering as a consequence. Maybe that's just me.

Anyway, most of the really great contracts in my life have come from dumb luck. The first gig with my old partner came from hanging up flyers with tear-off contact info at the bottom around the local college. I worked at an agency I loved for 4 years because of a Craigslist ad. Right now I'm contracting for someone who found me on a local tech Slack for my city. It kinda stinks to be at the whim of serendipity, but truthfully that's the stuff that life is made of. You just gotta put yourself out there and keep a positive attitude and take what comes along. Just don't let yourself get taken advantage of early on like I did. Learn to communicate and set boundaries before getting burned out (exploited).

So the question remains - is there any real freelancing still on? (I'm not talking platforms here - I wouldn't go there for several reasons).

Sorry I just saw that after writing this, but I agree with you, so I'll go ahead and post this to illustrate what some of those reasons are, for me.

I hear this from companies that are 1) too big to bother with or 2) do not want to hire an external person.

In the first case, the client has some workforce deficiency, and, if they're a tech company, they're probably hiring this "middleman" to temporarily scale. Once this happens, they've probably had tons of billable hours extracted from them, get sour, and swear off contractors, or double down because of sunk cost / devil you know. These are complex sales deals, even for experience service business, I'd avoid.

In the second case, it's just an excuse, and I think it falls into a category of similar excuses ("We don't have the time to spec work", "We don't want to work with someone new to freelancing", etc etc) and almost always these people either want an employee, or a someone to boss around, not results. Also best to avoid.

My guess is you're new to qualifying leads, and it's really hard when you start, so keep trying. Chances are you'll be tapping your professional network for leads, or pitching strangers if you happen to get on a call with them via cold email. I wrote a guide, based on my experiences, to closing deals here: https://www.indiehackers.com/post/crush-it-stop-it-profit-th... (sorry for the self-promo). This can work for a while, maybe get your first recurring clients. After a few sales calls for clients, You may realize getting leads to come to you is best, or at minimum people should have a reason to answer your emails like having some kind of branding or marketing, so start writing, coding, tweeting, or whatever regularly to get attention. Keep at it. It's hard work.

You already dislike middlemen, so I don't have to give you spiel. While I don't like it either, people have kickstarted successful freelancing businesses by using them temporarily. My first freelance gig was with a consultancy as a sub-contractor, of course I got fired after two weeks, but it gave me the hunger to find more clients and find my niche to pursue. I'm still freelancing/consulting after two years.

On top of everything, you will fuck up, and that's okay, so give yourself some breathing room financially and mentally.

If you have any questions about freelancing/consulting, I'd be happy to try and answer them.

Btw, I looked into IR35 regulation, and I'm not a lawyer/barrister/esquire and this is not legal advice, but the IR35 regulation people keep talking about in this thread is very similar to the contractor self-employed definition in US/Canada, so i think that is a load of bull shit too. You might have to jump right to fixed rate work then so you do not qualify as "Off-payroll Worker". UK government has a cute little tool for determining this: https://www.tax.service.gov.uk/check-employment-status-for-t...

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