Subtract hassles, add $$$ to indie life
Let the experts handle your admin so you can focus on YOUR expertise.

By Matthew Moran
The I.T. Career Builder's Toolkit

If you've decided the traditional employee-employer relationship is not for you, welcome to the club – you're not alone.

Millions of men and women have joined the swelling ranks of the free-agent workforce: consulting, freelancing, contracting.

Some do so for the money, hoping to cash in on their hard-earned talents that are often under-recognized in the more traditional corporate mindset. Others do so for the freedom, finding they can set a schedule that can be molded to their life. And there are those who have entered the field by proxy, the result of company layoffs or closings.

Whatever your reason for free agency, selling your technical talent on the free market can be intoxicating. There is an entrepreneurial spirit that is simply driven by the prospect of taking responsibility for, and carving one's own path. However, tread carefully. There are some notable mines in that field before you. It is my hope to help you cross the most dangerous areas safely – arriving at your goal relatively unscathed.

Deduct tax duties from your lap
Being a free-agent, there can be little doubt that business administration – the back-end processes that are traditionally handled by the human resources department – is the first to suffer. This includes: acquisition and administration of health benefits; effective pre-tax savings programs like dependent care, 401(k), and other vehicles available to corporate America; workers compensation insurance; and the timely payment of taxes.

Although each of these areas can be of huge concern, the latter, taxes, is a particularly painful thorn in the side of many contractors. The majority of contractors have an extremely difficult time paying the requisite lump-sum taxes due each quarter. It requires discipline. Additionally, many contractors assume that because they have "gone into business for themselves", they will be able to reduce their tax burden through a plethora of deductions.

It is important for you to note: As a free agent, it's likely you're conducting a straight service business with little to no overhead. Certainly there are deductions you can take, but if you're profitable [an easy task for someone working out of a home office], you'll pay taxes.

Health insurance is also an issue. Many contractors leave a company and find that they must go through hoops to find a decent insurance plan. I have interviewed several techies who simply choose to continue their old company's benefits using COBRA, a convenient but expensive option. Others choose to go uninsured and pay out of pocket for doctor's visits. This is a financial disaster in the making. One particularly bad illness or injury and you may end up paying the associated bills for years.

Typically, contractors come to be because their strong technical proficiency has put them into a stronger bargaining position. It is not because they are trained on the particulars of business administration. The good majority of contractors know very well how to perform the tasks that earn them income [Income Generating Activity]. Where they suffer is in the vital details mentioned above.

Resources available
Here are a few items that can make your transition to consultant much less painful.

Here is a list of resources to make your free agent life much easier. [Individual style and need may dictate additional resources or supplant some of those here. However, having consulted many an independent on their profitability and marketing, I think these comprise the proverbial Holy Grail of contracting.]

Techies Career Benefits Network/SOHO Resource Group, Inc.
[Note: This may sound self-serving because this article appears here. However, the article and the need for the removal of business administration tasks were written before the alliance was in place.]

I've coined the term "Income Generating Activity" and place your ability to perform that as the most critical element to your success. If, for some reason, you love the thought of paperwork and time-consuming administrative tasks more than billable hours, then this service is not for you. However, if you understand the goal of business is profits, then you'll appreciate why this service provides great value. By removing the cost of health benefits, 401(k) savings, and other programs with pre-tax dollars, you greatly reduce your taxable income – while gaining the added benefit of time. Time that can be spent on your IGA.

Simple accounting software
QuickBooks is king in this area. It helps provide simple profit/loss statements. However, now its online service is giving the software a run for its money. The online site boasts most of the reports available in the software, can create your printable voucher checks, and can generate invoices. If you're already using QuickBooks you can upload your current file and, depending on the amount of data, be using it online in a few minutes. It becomes accessible, like online banking, via a Web browser.

RapidOffice™
This is one I particularly like. For a low fee you can get email, receive faxes, track contacts, and get a toll free number that can be forwarded to your cell phone or a land line, as needed. In fact, you can have it forward to multiple locations, if desired.

Do not become paralyzed by every detail. Make a decision and go in the direction it offers. More than likely, even if wrong, the decision will allow you to adjust your sights accordingly and make the necessary correction. The rhetorical "analysis paralysis" is death to business. I look for an 80/20 split. I believe that 80 percent of my actions and decisions will be correct and that 20 percent will be partially or completely wrong. I'll correct those. It takes less time to deal with the 20 percent then to never act on 100 percent.

– Matthew Moran is an author and technology consultant based in Scottsdale, Ariz. His unique focus and approach to consulting – Concept Over Process – has helped him develop business solutions for a variety of industries and companies. He has developed, "The IT Career Builder's Seminar," and its companion book, "The IT Career Builder's Toolkit: The Insider's Guide to Building Your Technology Career in Any Economy."