Welcome to WebmasterWorld Guest from 3.81.28.94

Forum Moderators: LifeinAsia

Message Too Old, No Replies

How does freelance work compare to salaried positions?

     
5:59 pm on Sep 12, 2008 (gmt 0)

Full Member

10+ Year Member

joined:Mar 8, 2003
posts:234
votes: 0


I am currently working at a media company for salary. I was just approached by another company that wants me to do some free lance work for them for around 2.5 times per hour what my salary breaks down to per hour. Some freelance work now with the possibility of being offered a full position with them in the future.

Taking just money2money it looks like I will be far better off with the new company but I am unsure I am thinking about everything.. I'm sure that I will have to pay taxes on that money but will it reduce the total amount by an appreciable amount? Also, if they are offering that much for freelance, before I have proven myself, do you think that a fulltime position will be a higher wage or a lower wage?

6:24 pm on Sept 12, 2008 (gmt 0)

Moderator This Forum from US 

WebmasterWorld Administrator lifeinasia is a WebmasterWorld Top Contributor of All Time 10+ Year Member Top Contributors Of The Month

joined:Dec 10, 2005
posts:5844
votes: 190


(Assuming you're talking about the U.S....)
From just a money standpoint, remember that companies pay 50% of their employees' FICA/Medicare (taxes). As a freelancer, you'll get the "privilege" of paying 100% of those "taxes." :) But you also get to deduct some expenses that you wouldn't be able to otherwise. Talk to a tax professional about the specifics.

But money is just one aspect. What about other benefits offered by your employer (medical/dental, paid time off/sick leave, 401K matching, being paid whether or not you're actually doing work, etc.)? There's also a lot to be said about the stability of a steady paycheck.

What's the possibility of freelancing with them while keeping your current job? THen you have the best of both worlds.

6:41 pm on Sept 12, 2008 (gmt 0)

Senior Member

WebmasterWorld Senior Member 10+ Year Member

joined:Dec 15, 2003
posts:2638
votes: 5


I was faced with this decision a little while back and going on my own was the best thing that I have ever done.

I did a "staggered" rollout though. I kept my 9-5 and took contract work outside those hours... soon I was turning away contract work in order to go to my 9-5 that was when I cut the ties.

Since then I have never had a problem paying my bills. I am booked solid into the new year and I am back to turning away new clients, even after hiring some guys.

Make sure if you go for it that you keep it sustainable then grow it out. Don't go rent an office and incur a bunch of expenses, no new laptop yet.

9:26 pm on Sept 12, 2008 (gmt 0)

Senior Member

WebmasterWorld Senior Member 10+ Year Member

joined:Apr 26, 2004
posts:778
votes: 1


going on my own was the best thing that I have ever done.

Ditto that

However, a couple of things to consider. Asia spelled it out pretty well, but I would second the comment about medical and dental. That is a HUGE benefit! In my case, my wife works as a teacher in a nice suburb and hence has some of the best medical coverage possible that she covers our whole family with. If your current insurance is just average or you have a spouse that can cover you then I say there is absolutely nothing equal to entrepreneurship and self-employment.

The other points of paid sick leave and 401K, are benefits, but keep in mind I consider those a clear second place to medical, I can fully replace these benefits easily. I have my own corporation and set up a solo 401(k) plan for myself which is a 1,000% better than any plan I ever had at a company because all of the funds and options I can pick from were custom picked by me and my financial planner. As for sick days, amazingly I need a lot less of them now that I work for myself :) Seriously, this is just a matter of managing your cash flow and work schedule to be able to take sick days and vacations. It can be done, but requires a little more planning and thinking than the employee mentality of simply calling in sick or skipping out of the office for a paid week of vacation while your co-workers pick up the slack, but it can certainly be done, I do it every year.

Also if you have a sharp CPA you will be amazed at the tax benefits you can pick up being self-employed, but definitely hook up with a very skilled and experienced CPA that works with small businesses and particularly self-employed individuals.

I did a "staggered" rollout though. I kept my 9-5 and took contract work outside those hours

Great suggestion! I did not do this. I started my business after being downsized and still needing a paycheck. It was a rough start and not one I would recommend if you don't have to do it. However the positive side is that I was a major procrastinator about actually staring my own business full time. I would take on extra freelance opportunities for extra cash, but would never ween myself off the full time employment. Once I was forced to do it for a living I actually made it into a real business and that might have been something I would never have done if I had the comfort of a 9-5 and regular paycheck.

keep it sustainable then grow it out. Don't go rent an office and incur a bunch of expenses, no new laptop yet.

Another great suggestion. Two things that will kill an entrepreneurial career faster than anything is not getting off your tail to sell your services and keep new projects coming in and loading up on the overhead and expenses. After 5 years on my own I still tightly control my monthly expenses. They have gone up a little, but not a lot and I regularly review them to find what I can cut and where I can save money at. I still work out of a home office and absolutely love it.

I encourage anyone and everyone that has even a slight entrepreneurial itch to scratch it. Most people that take the plunge all say the same basic thing... they wished they had done it years before. However as with any major life shift it has issues that need to thought through and resolved. Sadly I hear there are some people who simply can't survive on the outside and willingly go back to prison, err, I mean full time employment. I know I will never be one of them again.

11:10 pm on Sept 12, 2008 (gmt 0)

Moderator This Forum from US 

WebmasterWorld Administrator lifeinasia is a WebmasterWorld Top Contributor of All Time 10+ Year Member Top Contributors Of The Month

joined:Dec 10, 2005
posts:5844
votes: 190


All great comments! I just wanted to say that I didn't mean to scare you off with my comments. I also took the leap many years ago, which was one of the best decisions I ever made (although there were times I questioned that...).

I also did my own 401K through my own corp. But what I was trying to say in my first post is that it's noce to have OTHER people's money matching your contributions. :)

And make sure that you get advice from your tax advisor FROM THE BEGINNING. Although there are a few things you can do after the end of the tax year, most of the write-offs come before the end of the tax year. Sceduling purchases (or billing) can make a big difference. (For example, if you've had a slow year, but things are starting to pickup for next year, you may want to delay that big purchse until after the first of the year, so you can deduct it next year when it will help you more.)

3:34 am on Sept 13, 2008 (gmt 0)

Full Member

10+ Year Member

joined:Mar 8, 2003
posts:234
votes: 0


Maybe I didn't make myself clear. My intention isn't to make myself self employed (though that is something I aspire to).. I mentioned that the freelance work would be until they decided to offer my a full time position. I was wondering if you all thought that given what they are offering perhour if you thought a full time gig would be a higher rate or a lesser rate.

I do plan on doing the freelance work until they decide to offer me a full time position. My intention is to be employed by a company until such a time when my residual income supports me.

5:16 pm on Sept 13, 2008 (gmt 0)

Senior Member

WebmasterWorld Senior Member 10+ Year Member

joined:Apr 26, 2004
posts:778
votes: 1


although there were times I questioned that...

I think that has happened to anyone that has been self-employed at some point or another in their career, but my programmer said it best one time when he said the up days far outweighed the down ones.

that it's nice to have OTHER people's money matching your contributions. :)

That is very true. To some people this represents additional money they wouldn't otherwise get from an employer. However in my experience only the larger companies did this in the first place. Prior to self-employment I always worked for smaller companies who offered a plan, but didn't match it and the plan was typically terrible anyway. I never really had any experience with a good employer matched 401(k) plan so anything I did was an improvement.

mentioned that the freelance work would be until they decided to offer my a full time position.

What if they never offer you full time employment? If you quit your first job and do this until you get this offer you might be waiting a while. You should enter this because you want to be self-employed and if and when a job offer comes along then decide if you still like the self-employment gig or want to go back to the man.

If you are absolutely sure you don't want to be self-employed then I would have a heart to heart with this company and have them make you an offer for full time employment BEFORE you leave the first place.

My intention is to be employed by a company until such a time when my residual income supports me.

What type of income are you talking about?

What if you never reach this point?

In my experience you have to decide to be self-employed and entrepreneurial and as Nike says... "Just do it" or plan to stay employed forever. If I had waited for the "perfect" time to do it I never would have. The fact is for many people the perfect time never comes and there is always just a few more things to put in place, a few more bills to pay off, etc before it will be the perfect time and somehow the perfect time never seems to arrive.

2:16 am on Sept 14, 2008 (gmt 0)

Full Member

10+ Year Member

joined:Mar 8, 2003
posts:234
votes: 0


I don't plan to leave the first place until I would have a full time offer from the second place and yet do free lance for them on the weekends etc until I do receive that offer. I believe the freelance work to less of a ongoing arrangement and more of a demonstration of skill test. Which is fine. I understand they would want me to show them how I work before they would bring me into the fold.

The "residual income" is something that I have been slowly building for some time as my skills improve.

It will happen for me eventually, it wasn't really that long ago I was a simple manual laborer and took myself from ZERO to xhtml/css/mysql/php skills. I aggressively self teach.

12:17 pm on Sept 14, 2008 (gmt 0)

Senior Member from US 

WebmasterWorld Senior Member lorax is a WebmasterWorld Top Contributor of All Time 10+ Year Member Top Contributors Of The Month

joined:Mar 31, 2002
posts:7577
votes: 4


So your pay rate would still be 2.5 times more than the first place WITH benefits and taxes handled by the 2nd company?
6:02 pm on Sept 14, 2008 (gmt 0)

Senior Member

WebmasterWorld Senior Member 10+ Year Member

joined:Apr 26, 2004
posts:778
votes: 1


It will happen for me eventually, it wasn't really that long ago I was a simple manual laborer and took myself from ZERO to xhtml/css/mysql/php skills. I aggressively self teach.

If you keep that attitude I am absolutely certain it will happen for you and be all the sweeter when it does. Aggressive self improvement and investment in your skills is what separates the winners from the mediocre.

If you plan on freelancing on weekends until a full offer comes through and then leave the first job I say go for it. However you may discover that you like the work for yourself model as you do.

9:05 pm on Sept 14, 2008 (gmt 0)

Full Member

10+ Year Member

joined:Mar 8, 2003
posts:234
votes: 0


@Lorax - that is one of my questions for this thread.. I don't know.. I would be very surprised if that would be the case given that they would also be paying all those extra things on top of the hourly. What has been anybody's experience with going from a freelance arrangement to a fulltime arrangement.
5:19 pm on Sept 15, 2008 (gmt 0)

Senior Member

WebmasterWorld Senior Member 10+ Year Member

joined:June 13, 2002
posts:2175
votes: 0


Why not just ask them (or tell them) ?

Theres no rule other than you generally earn less as an employee but get more benefits. Rates will depend on the sector, market rates, your perceived value, negotiation and availability of others with the same skills.

What do you value? security or constant change, big bucks or steady income? pension or comissions - just negotiate the deal that suits you both.

5:58 pm on Sept 15, 2008 (gmt 0)

Senior Member

WebmasterWorld Senior Member 10+ Year Member

joined:Apr 26, 2004
posts:778
votes: 1


What has been anybody's experience with going from a freelance arrangement to a fulltime arrangement.

I doubt very much that they would include benefits in this arrangement for two reasons. One you are a freelancer and not an employee so I am not sure they can offer you benefits in such an arrangement. Second, one of the reasons you agree to high hourly rates for freelancers is because you DON'T have to provide benefits or pay taxes for them. The freelancer is responsible for providing this for themselves so they tend to charge higher hourly rates to cover these expenses.

Why not just ask them

I agree, guessing is a waste of energy. Just ask and find out for sure what is on the table and what is not.

9:55 pm on Sept 16, 2008 (gmt 0)

Full Member

10+ Year Member

joined:Mar 8, 2003
posts:234
votes: 0


@aspdaddy, how about a constant income of big bucks?

I do plan to ask when we get to that place in our working relationship but I certainly want to be somewhat appraised of what would be considered a normal conversion ratio (freelance to fulltime) so I don't come off as either under or over valuing myself.

Call my questions market research. This IS the place to ask questions about things a person needs to know right? 8-)

6:16 am on Sept 19, 2008 (gmt 0)

Senior Member

WebmasterWorld Senior Member essex_boy is a WebmasterWorld Top Contributor of All Time 10+ Year Member

joined:May 19, 2003
posts:3212
votes: 17


Im self employed all bit in a nother line of work, the pay rate is vastly improved and you dont really have to take any rubbish from anyone. The two main reasons I do it.

Work flows in easily if your good at your job.

7:12 am on Oct 1, 2008 (gmt 0)

Preferred Member

10+ Year Member

joined:Jan 4, 2005
posts:621
votes: 0


All good points. Self-employment is great. I am doing it now for the 8th month of my first year while I look after my 10 month old son. It helps to have an established client base with some savings to support yourself but it is an eye-opener. I had nothing to lose, dead-end job, wife going back to work, stable clients, son needing attention, go for it! Glad I did.
9:01 am on Oct 5, 2008 (gmt 0)

Moderator from AU 

WebmasterWorld Administrator anallawalla is a WebmasterWorld Top Contributor of All Time 10+ Year Member

joined:Mar 3, 2003
posts:3773
votes: 21


I have twice gone from freelance to salaried because I could not look after sales as well as do the work. I was late in billing my clients so I didn't get paid in time. The moral for me was to be better organised and disciplined.

Each person and their opportunities are different, so you can't assume someone else's success can be replicated by you.

In both cases the salaried position gave me experience I could not have had in my circumstances, plus stock options, other corporate perks, and I worked shorter days. I could take paid holidays, whereas I didn't as a freelancer.