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what would you do in this position?
deciding on career paths...
tonynoriega




msg:3222355
 3:52 pm on Jan 17, 2007 (gmt 0)

So you are currently a web developer / graphic designer at 40k per year. Good benefits pkg, normal desk job 8-5. You handle 2 sites for a software developing company as well as all advertising graphics for print, web, ....etc. So are sitting pretty good with a raise coming up , but you dont know how much.

A land developer approaches you to work for them on a contract basis. You were planning on being your own boss someday, so you go and file for your LLC (limited liability corporation) license. They want to pay you 40k for the first 6 months, then a 5k bonus after that to put you at 45k annual. You will have to get your own benefits pkg. for you and your family. You get paid in quarterly chunks, as to have less tax taken out....you will be working some crazy hours, but know you can handle it. The job involves some serious web design and development integrating some databases (SQL) which you know you can do.

Do you sit pretty where you are at and hope the raise is comperable to what you will get in 6 months as a contractor?

Or do you give your 2 weeks and become a contractor, get the bonus in 6 months, worry about your benefits pkg. for your family and work some crazy hours?

 

LifeinAsia




msg:3222423
 4:36 pm on Jan 17, 2007 (gmt 0)

get paid in quarterly chunks, as to have less tax taken out....

Huh? This makes NO sense. (I'm assuming you're in the U.S. If not, then your tax laws may be different.) How did you reach this conclusion?

Things to consider:

1) If the land developer goes belly up before you get your first payment (or for whatever reason decides not to pay you), can you handle it (financially and emotionally)? Before you give the standard "Oh, that will never happen to me" line, please read the numerous threads on WW about clients who never pay. Regardless of the probability of it happening, factor it into your decision: IF IT DOES HAPPEN, can you live with it?

2) Look into the prices of benefits packages that you can get on your own. Factor that into your overall compensation calculations.

3) In regards to taxes, remember that as an independent contractor, you are responsible for 100% of your Social Security and Medicare payments (when you are an employee, you pay half and the company pays half). On the plus side, as an IC, you potentially have a lot of business decutions you can use to lower your taxable income. Talk to a tax adviser to get the big picture, and factor this into your overall compensation calculations.

4) Long-term, what are your prospects for other contracts once this one finishes? What if the economy takes a nose dive and no one wants to contract with you? How long can you and your family survive without revenue? Does your wife work? If so, how long can you survive on just her salary? Sound advice is to have 6 months of savings you can burn through with no income coming in.

5) If you do decide to jump ship and strike out on your own, make sure you get a written contract from the developer (and EVERY other contract). Make sure you have that contract signed and approved BEFORE you give your notice. Make sure you have future contracts signed and approved before starting work on other contracts.

tonynoriega




msg:3222453
 4:52 pm on Jan 17, 2007 (gmt 0)

Yes i am in the US. The owner stated that she would pay me in quarterly chunks upfront, which will allow for less taxes taken out, versus a bi monthly payment schedule....yes that is new to me.

I do plan on getting a signed contract for everything they want me to do, payment, profit share...etc.

BTW, i am also eligile for the end of year profit share.

Benefits are going to be comperable to what is taken out of my checks now....maybe a 50 dollar difference.

i do plan to get an an accountant, CPA, tax advisor....whichever...

yes, the deductions are attractive, and im sure will help come tax time next year....

AGHHHHHHHHHHHHH, i plan to make this decision today and i still dont know what i want to do....my stomach hurts im so nervous and stressed.....

thank you for the reply and insight....very helpful.

The Contractor




msg:3222462
 5:00 pm on Jan 17, 2007 (gmt 0)

No one can answer this for you, but you better think very hard about this..hehe

It's all in the details and I certainly wouldn't feel rushed for a decision. If the new company can't understand the decison you have to make and/or give you a bit more time..I'd forget about them. But, then again I don't know the details/situation of how much time they have given you.

Biggest Question:
Is this something you could continue doing and making a decent living at if the relationship fails between you and the developer?

If the answer is "no", then I would forget about it. Why take risks when the payoff will not be that great and you are still depending on a single company to buy your groceries?

willybfriendly




msg:3222504
 5:31 pm on Jan 17, 2007 (gmt 0)

While it may not be good to generalize too far, my experience with land developers is extremely negative. Procede with great caution. And remember, $$$ in hand are worth more than the tightest of contracts. It is almost certain that any real estate agent or land developer has far more experience in civil court than you do - and probably better attorneys too! Practice due diligence. Gather as much info about the company and the key players as possible before committing yourself.

WBF

tonynoriega




msg:3222524
 5:49 pm on Jan 17, 2007 (gmt 0)

Im thinking...believe me....

Well, i have kind of been in and out of meeting and negotiating over the past week or two...she didnt really offer me the position until last night....

she is in a great need of my skills....they are way behind on all of their websites....

yes i could make a decent living doing this if the relationship fails, i have several other smaller clients lined up for future projects already.....

i see where you are coming from depending on them just for my income....

oh happy days.....

LifeinAsia




msg:3222528
 5:54 pm on Jan 17, 2007 (gmt 0)

The owner stated that she would pay me in quarterly chunks upfront, which will allow for less taxes taken out, versus a bi monthly payment schedule

By "upfront" does he mean he's going to pay you for the first quarter in advance? If so, that's a much safer solution (for you) than paid at the end of the quarter.

But as far as what he's telling you about less taxes being taken out, that's a huge red flag to me. Ask him to clarify exactly what he means. And having an IC participate in profit sharing sounds like another red flag. Profit sharing is usually reserved for employees (profit sharing plans) or owners/investors (dividends).

tonynoriega




msg:3222566
 6:19 pm on Jan 17, 2007 (gmt 0)

Well there is only one actual employee of the owner, and she is the receptionist. Everyone else is either an "S-Corp" or IC.

I was told, (although not on paper yet) that i would be eligible for profit share at the end of the year.

the taxes thing....im not sure, i will research that....it did sound a little weird to me, although being paid quarterly was an attractive offer.....i just have to figure out how much to save to pay taxes on it myself...?...right?

i dont know ...Stability at my current job. or Flying on my own?

jessejump




msg:3224288
 11:16 pm on Jan 18, 2007 (gmt 0)

Can you research this guy's track record? What has he built, developed? Better Business Bureau? Chamber of Commerce.
Paying quarterly to reduce taxes sounds like someone who is willing to dodge around things.
If this was a business with many employees, equipment, trucks, offices, I would think better about it.

Marcia




msg:3224300
 11:32 pm on Jan 18, 2007 (gmt 0)

They finally decided last night and are insisting on a decision today? That is a high pressure sales tactic and in itself is a big red flag.

I'd pass on this "opportunity" especially with that quarterly thing. They're offering to shell out just a little bit more now (using a high pressure closing technique) - which actually keeps you hanging for months before you'd find out if they'll ever actually pay for even a second quarter.

Essentially you'd be giving up everything you have that's stable (and essential) for one single, solitary quarterly payment. Out of that quarterly payment you would have to spend money immediately on family health coverage, live insurance, self-employment disability insuranace - and wouldn't even know if you'd be able to afford the payments a few months down the road.

I'd stay put right where you are without a moment of doubt.

Easy_Coder




msg:3224772
 1:11 pm on Jan 19, 2007 (gmt 0)

Quarterly paychecks are are not even close to being normal and should signal a cash flow problem to you. Ask for financials and don't be afraid to pin them down on it.

If your still tempted, it's a negotiation so you have some leverage because they want your skills. Take the 5K bonus upfront or tell them thanks but no thanks and that you need to look out for your family. I'd also tell them to shorten the pay cycle to bi-weekly or twice a month or no dice.

Marcia




msg:3224785
 1:23 pm on Jan 19, 2007 (gmt 0)

There's been a seriously mistaken tendency in this thread toward thinking in terms of an employer-employee relationship. That is NOT the case with a web developer who is an independent contractor. For the latter, a BIG percentage would be required up front, with payment in full before a completed site is delivered to the client.

There is a big difference between

employer & employee
client & contractor

Until that distinction is fully understood, you'd best stay in a secure employee role, else you'll get "screwed, blued and tattooed."

tonynoriega




msg:3224936
 3:19 pm on Jan 19, 2007 (gmt 0)

Well, after discussing the issue further, we have come to an agreement that i would be paid monthly. The quarterly thing she was talking about is for me to file my taxes, as an IC you need to file quarterly taxes....why?...i dont know.
But that sounded more feasible than getting paid on a quarterly basis.....

Also, i have it in writing that i will be eligible for profit share at the end of the year, and at 6 months i get a 2500 raise, and at the end of the year another 2500 raise = 5000 annual raise.

so i feel more comfortable getting paid on a monthly basis.

thanks everyone for your insight (and concern) but i think with the new options available im ready to become my own company and start workign towards my goals of runnign my own business.

ACN Designs LLC. Its funnny, that i call myself a webmaster and i dont even have a personal website..... i guess i never have time, and by time the day is over the last thing i want to do is go home and do more HTML....*bleghhhhhh*

LifeinAsia




msg:3225036
 4:37 pm on Jan 19, 2007 (gmt 0)

The quarterly thing she was talking about

Well, you should file estimated tax payments quarterly. But that has absolutely nothing to do with the frequency of your payments from them.

Since they are agreeing to pay on a monthly basis, that lowers the red flag somewhat.

It sounds like you have thought this through quite a bit and weighed the risks. If you think the risk level is acceptable for you, then good luck!

Don't forget that doing the work you're getting paid for is only half the job of being an IC. You also have to prepare for future work (so keep networking) and handle all the crappy backend stuff (taxes, accounting, insurance, etc.).

tonynoriega




msg:3225065
 4:50 pm on Jan 19, 2007 (gmt 0)

Yes, i have thought this through with a fine tooth comb....with only a few broken teeth on the comb...

its exciting, and nerve racking at the same time.

im going to find me a CPA quick and not screw anything up....

Networking...yes indeed....if this project falls apart in a year...then hopefully i will have met enough people to say, "hey" and continue my work...

thanks again for everyones insight...ill be here to keep everyone updated and maybe ask some more questions.

ACN Designs LLC

Easy_Coder




msg:3225632
 2:47 am on Jan 20, 2007 (gmt 0)

Best of luck to you Tony!

tonynoriega




msg:3225712
 4:56 am on Jan 20, 2007 (gmt 0)

well heres the recent scoop...

i put in my 2 week notice at my current job, and my boss was very positive. He wished me good luck, wanted to keep me as their designer on a contract basis, and even said he would direct various projects my way from outside resources...

he was impressed by my decision and thought i was the best designer he had seen in his 10 years at the company...

so i got a full time contracting gig, some backup work from my current company, and even future projects as referral...

i feel good about my decision and am going to put things into full gear just the way i work....

im a former sailor...so i go "full speed ahead"

damn...that was corny.....screw it....im happy

CatLady




msg:3226575
 6:18 am on Jan 21, 2007 (gmt 0)

Glad to hear that things went well with your current employer - it never hurts to keep the doors open for the future :) Good luck in your new venture!

Fortune Hunter




msg:3226924
 8:15 pm on Jan 21, 2007 (gmt 0)

and not screw anything up....

Don't count on it, I have been self-employed for over 3 years and I even have an MBA, but I have made a ton of mistakes, but the good news is I haven't made the mistake yet, which has been my saving grace I am sure and so far I have never repeated the same mistake twice. Working for yourself is really exciting, but has a big learning curve if you have only been employed by others for your whole career.

In my case I actually started in a much worse spot than you, I was fired from a job and decided I had enough of the whole employee thing and started on my own. It was less than the ideal position to start from, but it has been great.

I would say you are in a good position with good relations with your old employer and a written agreement with the new company, plus some other clients. I would say as quickly as possible try picking up new clients and spreading your risk even more. Try not to depend on one person for any more than 10-20% of your income because that can be almost as bad as an employer (or worse) if they drop you.

I would also recommend you read a few books on bookkeeping and being self-employed and maybe even see if your local chamber of commerce has a course for new businesses. If they do they can really give you some good info about starting and running a business.

I also use a networking group called BNI, which stands for Business Networkers International and after 3 years my group has brought me a lot of new clients and business that has helped me grow, plus provided me access to a great CPA and Attorney that have kept me on the right path.

Fortune Hunter

Kendel




msg:3228065
 9:46 pm on Jan 22, 2007 (gmt 0)

I know I'm coming onto this thread late, but my recommendation is that you get an accountant very soon. Just remember, as someone is paying you for your expertise you need to pay someone for theirs, and accounting and taxes are two issues that can really impact you as an independent contractor. When I was doing it I was working as 1099, but you as an LLC will still have issues to work through with passing the income through to yourself.

Also, i have it in writing that i will be eligible for profit share at the end of the year, and at 6 months i get a 2500 raise, and at the end of the year another 2500 raise = 5000 annual raise.

This is concerning in that as a contractor you would not be getting 'raises' per say. You could have rate increases negotiated, but you want to be sure (and the owner of the company really wants to be sure) that what is being done does not look like an employee/employer relationship. This can have an impact on your tax situation, and for her, could raise other issues with the IRS, etc. (Microsoft probably being the most notorious case where they ended up on the wrong end of this issue).

When I started I grabbed a book on being an Independent Consultant/Contractor (cannot remember the name). It included sample contracts, etc. I also believe NOLO has a book for this as well.

And as others indicated, be sure and build up your cash reserve (6 months living expenses was my guideline as well) so in case something does go wrong you can weather the storm.

tonynoriega




msg:3228756
 3:12 pm on Jan 23, 2007 (gmt 0)

You are right, its not actually a raise, per say, becuase i will be an IC...it was labled as a "bonus".

And check this out 2 weeks before i start my new venture, my laptop motherboard decides to kill itself....YEAHHHHH.....so now best buy tells me 3 week turn around.....

oh what perfect timing....plus i was right in the middle of another clients project and have to halt that....

perfect timing....

an omen maybe?

Pagoda_Koi




msg:3236975
 10:14 am on Jan 30, 2007 (gmt 0)


So you are currently a web developer / graphic designer at 40k per year. Good benefits pkg, normal desk job 8-5. You handle 2 sites for a software developing company as well as all advertising graphics for print, web, ....etc. So are sitting pretty good with a raise coming up , but you dont know how much.

A land developer approaches you to work for them on a contract basis. You were planning on being your own boss someday, so you go and file for your LLC (limited liability corporation) license. They want to pay you 40k for the first 6 months, then a 5k bonus after that to put you at 45k annual. You will have to get your own benefits pkg. for you and your family. You get paid in quarterly chunks, as to have less tax taken out....you will be working some crazy hours, but know you can handle it. The job involves some serious web design and development integrating some databases (SQL) which you know you can do.

Do you sit pretty where you are at and hope the raise is comperable to what you will get in 6 months as a contractor?

Or do you give your 2 weeks and become a contractor, get the bonus in 6 months, worry about your benefits pkg. for your family and work some crazy hours?

You stay where you are at and develop a business plan to operate your own eCommerce website and build that. Once your eCommerce site gets to the point that it needs your full attention you quit and focus 100% on your OWN business.

tonynoriega




msg:3237216
 3:17 pm on Jan 30, 2007 (gmt 0)

KOI, i would agree with you, but do you know how many web/graphic designers there are out there?....we are a dime a dozen...(maybe 2 dozen)... theres nothing else i have to offer that could be e-commerce based.....

Search for "web designers" and see how many results you get returned. Its a saturated market and i see people selling web design services for pennies on the dollar?...no way....

I would rather get out there, network, meet more contacts...earn a good name through referral and word of mouth. 75% of new business comes from referral (family, friends, coworkers...etc.). I would be wasting my time trying to run an online business. You got these single teenage punk kids who throw together a Flash template web site, or a CSS template to a customer with 2 pages, and thats it....
Me, i got a family of 3 kids and a wife....i need to venture out and spread the word that im the best graphic / web designer in Boise and push my salary up each year as my clients become more high profile.

in any case, im not staying where im at, im leaving this week and will be contracted throuhg the next year....good luck to me.

Fortune Hunter




msg:3238718
 8:23 pm on Jan 31, 2007 (gmt 0)

do you know how many web/graphic designers there are out there?....we are a dime a dozen...(maybe 2 dozen)...

You are absolutely correct on this point. I would recommend that as quickly as possible you start becoming an "Internet Marketing Consultant" or "eBusiness Strategy Consultant" or something along those lines. Expand your skills to include not only things like SEO, but copywriting, and strategy sessions. I have done this pretty well in my market and as a result I do much better than many other freelance "web designers". I have found if I position myself like a commodity I get paid like a commodity, but if I position myself as a consultant with a certain area of expertise I get paid much better.

FH

tonynoriega




msg:3238744
 8:37 pm on Jan 31, 2007 (gmt 0)

Internet Marketing Consultant...

That sounds much better...mind if i use that?...sorry i cant pay your any royalties for it....i havent made any money under my new business yet...!

I also read in a Yahoo Hot Jobs article the 5 most wanted jobs this year...Web Developer was one of them....average salary raning near the 60-70k?!?!?!?...what the hell?....

I am waayyyyyy under bidding my self.....BUT ..i do need to set a foundation for myself as an independent contractor, so if this project lasts a year....i can bet, i will be worth that much in a years time..!

Fortune Hunter




msg:3240224
 1:17 am on Feb 2, 2007 (gmt 0)

That sounds much better...mind if i use that?

I didn't invent it, just borrowed it from somewhere. You will have to take up the issue of royalties with the inventor :)

I am waayyyyyy under bidding my self

Happens to the best of us, you will get over it and start charging people more, I promise.

Fortune Hunter

Essex_boy




msg:3241727
 1:55 pm on Feb 3, 2007 (gmt 0)

Land developers i.e builders consitantly try to short change and stitch us up at work.

Crooks ! Leave well alone

tonynoriega




msg:3241789
 4:01 pm on Feb 3, 2007 (gmt 0)

Im cool with it for the meantime.....ill do what i got to do and when they see what i can do....and they network between their associates and discuss who i am and what i am doing for them....

thats when my stock rises ....when its time to terminate the contract, i play the market, become a free agent, and get my salary increase....

like i said, i read an article on hotjobs.com that stated Robert Half Technologies announced the 5 most wanted jobs in 2007 and Web Developer was one of them.....i dont doubt that for a minute.....so many people are crossisng over to the web just to get on the bandwagon....what separates the good from the bad is what you can do for the customer....have a wider portfolio, have a better chance of landing the high priced gig....

me im learning all facets of whatever comes my way.....i dont want to get stuck in one area and not move one....

just my 2 cents.

King_Fisher




msg:3243912
 9:10 am on Feb 6, 2007 (gmt 0)

Go for it! Even if this fouls up later, you sound like you have
enough experience to catch on some where else. Talent will all ways
find a home.

I left my job as one of the top salesman in a national sales organization. Had some skinny times but am now making three times
my old annual pay. You will never become wealthy as a salary man.
And its a way lot my fun if you do it on your own.

" Time and tide wait for no man...." Good Luck! King Fisher

Fortune Hunter




msg:3244692
 12:10 am on Feb 7, 2007 (gmt 0)

You will never become wealthy as a salary man.

Remember when working for someone else you are ALWAYS paid less than the person you are employed by. That being said your overall success always has a limit until you are out on your own.

Now that I have been on my own for a few years I love it. Just like others I had some skinny times (very skinny), but I survived and now I am thriving with more money and more opportunity to stretch my ideas, creativity and business in ways I would never have dreamed of until I was on my own.

Fortune Hunter

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