3. Sole Proprietorship/Partnership Advantages Easy and Cheap to Start All profits go directly to owner or 50/50 partners Complete control Disadvantages Unlimited liability All NET income taxed as personal income Potential loss of tax deductions Self employment tax
4. Limited Liability Company (LLC) Advantages Easy to setup Owner(s) have limited liability protection Disadvantages Taxed like Sole Proprietorship/Partnership Annual paperwork Potential for extra state taxes
5. S Corporation Advantages Owner(s) have limited liability No Self Employment Tax Salary distribution can be coupled with profit distribution to avoid higher tax rate. “Reasonable Salary” Additional Tax advantages Disadvantages Significantly more paperwork (legal and accounting) More expensive setup More complex operation
7. Errors & Omissions Protection from legal action related to poor decisions or bad advice Helps cover any award made against you Helps cover cost to defend a legal action Only good while policy is in effect, legal action in future without a policy means you are not necessarily covered Industry standard is $1,000,000 coverage Deductible affects the Premium AKA Professional Liability Insurance
8. Disability Insurance Protects your earning capacity in the event of an accident or fatal illness Difficult to obtain for Freelancers/Consultants due to fluctuation in income and lack of supervision Workers compensation can be a viable alternative Check on how the insurance company defines disability Standard coverage would be 60% of NET income Waiting period affects the Premium (like Deductible on other policies). Waiting periods usually break down in 30 day increments. 30, 60, 90, 120 or 365 day Length of Coverage Period is how long they will pay you while disabled. Standard terms are 1, 2 and 5 years, but longer terms are available. This also affects the premium Insurance for You
9. Life Insurance Only necessary if you have dependents Policy Types Term Policies vary widely, but some policies will return all premiums at the end of the Term. This affects the premium, but a great payday if you make it to the end Whole Life and Universal Life are not recommended as they are less coverage for a higher premium Standard recommendation is 70% of your earning power to provide a minimum of 5-10 years income for your dependents. Don’t forget to have a will too Insurance for Others
10. Other Insurance Auto Policy Talk to an agent about coverage differences for a car used for your business in comparison to your personal auto policy. Home Office Coverage Talk to an agent about this coverage since business liability coverage is not part of a homeowner’s policy.
12. Company Presence Name Keep it memorable Convey a message Be careful when using unique spelling Check domain name before final decision Logo Think about use in print materials Business cards Invoices Simple concepts are best Focus on positive vibrant colors Blue is most commonly associated with productivity
13. Communication Office Phone Cell Google Voice Vanity Phone Number Voicemail FREE Email NEVER use Hotmail, Gmail, Yahoo, ISP account, etc… Google Apps (custom domain) E-mail Calendar Documents FREE option
14. Marketing Tools Business Cards Overnight Prints (http://overnightprints.com) Vista Print (http://vistaprint.com) Social Media Twitter LinkedIn Facebook Website Various hosting options Content Management Systems can save time
15. Marketing Opportunities User Group meetings Speaking opportunities Chamber of Commerce or Technical Council events Networking events Blog
16. Home Office Tips Separate space from living area Know your square footage Keep recreational items out of area Invest in a desk and comfortable chair
18. Resume Highlight Technologies Types of Applications Industries Metrics of contribution Be sure to never violate Non-Disclosure (stay generic) Remove High School and non technology related jobs Irrelevant comments “I code like a girl” NO Third person bullets “Caleb developed a …”
19. Subcontracting W2 Employee like benefits Taxes, Medical, etc… Preferred by recruiting companies Corp to Corp Must have Liability Insurance Improves Rate negotiations Base rate Overtime rate Professional relationship
20. What’s my rate 52 weeks (in a year) * 5 week days = 260 days 260 days – 10 major holidays = 250 days (2000 hours) 250 days – 15 days vacation = 235 days 235 days – 5 days (off contract) = 230 days 230 days * 8 billable hours per day = 1840 billable hours 1840 * $50 per hour = $92k 1680 * $50 per hour = $84k ( 25 days off contract versus 5) “Never confuse the size of your paycheck with the size of your talent." Marlon Brando The 2000 hour myth
21. Contracts on your own Master Service Agreement (MSA) Agreement between your business and client to outline responsibilities and obligations each company has to one another. Your rates for service would be included here. Statement of Work (SOW) References the MSA for authority on those areas. Outlines the deliverables, timelines, etc… for a specific activity Find a good lawyer
22. Getting Paid Payment terms can be a great or terrible thing. Net Due - Difficult to get any company to pay Net Due, so don’t plan on getting paid that quickly. Net 10 – Get paid 10 days from receipt of invoice by customer. This is optimal, but not always possible. Plan on a 30 day deliver, just in case. Net 30 – Get paid 30 days from receipt of invoice by customer. Standard for most companies. Don’t go higher than Net 30 When the client doesn’t pay you have minimal avenues Send additional invoice as Net Due STOP WORKING FOR THE CUSTOMER Send certified or registered letter with copy of invoice stating payment not received and legal action will take place
24. Project Management ProjectTurf (http://projectturf.com) Full featured, no FREE option activeCollab (http://activeCollab.com) No Free option Basecamp (http://basecamphq.com) Free option Lighthouse (http://lighthouseapp.com) Free option “Trying to manage a project without project management is like trying to play a football game without a game plan.” K. Tate
25. Accounting FreshBooks (http://freshbooks.com) QuickBooks (http://quickbooks.intuit.com) PeachTree (http://peachtree.com) GET AN ACCOUNTANT FOR TAX SEASON “There's no business like show business, but there are several businesses like accounting.” David Letterman
26. Time Tracking Toggl (http://toggl.com) Windows, Mac, Linux, iPhone, Android, Web Works with BaseCamp, activeCollab, FreshBooks, QuickBooks Klok (http://getklok.com) Desktop, Android (BETA) Works with BaseCamp and Harvest Tick (http://tickspot.com) Web and iPhone Works with BaseCamp Harvest (http://getharvest.com) Desktop, Web
30. What is a Consultant Architect Developer Project Manager Business Analyst Salesperson Marketing person Everything in between “Consultants have credibility because they are not dumb enough to work at your company.” Scott Adams
31. Consulting is not for everyone Clients will not always treat you with respect It isn’t personal Clients may cut you loose for stupid reasons Have an emergency fund of 3 months expenses (minimum) Clients will sometimes use you as the scapegoat for their mistakes Be prepared, document everything to be ready You may have to take it, but you can protect yourself from legal action Clients can ignore your recommendations Again, it isn’t personal “It's just a job. Grass grows, birds fly, waves pound the sand. I beat people up.” Muhammad Ali
32. Accountability Seriously evaluate any major task to ensure you can accomplish it DO NOT accept any task if you cannot get it done CORRECTLY Own up to mistakes and accept the consequences It is worse to be known as seedy and deceitful Avoid giving dates without a firm understanding of requirements Always send a follow-up e-mail confirming what was communicated and your understanding “No snowflake in an avalanche ever feels responsible.” George Burns
33. Politics DO NOT participate in office politics DO NOT speak negatively of any consultant(s) directly DO NOT be afraid to speak, if you know you are right Know who the REAL client is and serve them as such Remember as a consultant you can ALWAYS leave “Hard work is rewarding. Taking credit for other people's hard work is also rewarding... and faster.” Unknown
34. Client Interaction Conduct yourself in a professional manner with everyone and in all situations Work on your ability to translate complex information into simple terms or analogies Try to have alternative options available, in case the client decides against a recommendation Remember metrics are crucial for communicating benefit, measure and share Don’t be afraid to say “I don’t know”, but don’t let that be the last thing you say. As a consultant you learn for a living “… a professional is someone who can do his best work when he doesn’t feel like it.” Alistar Cooke, journalist
35. Client Interaction (cont.) Develop your ability to speak intelligently on a number of topics, but don’t misrepresent your abilities Be a contributor, not just an order taker Break up work into phases Allows the client to see progress Protects you from unexpected requirements impact Be clear about your style/approach and how deviation from best practices can impact timelines.