[HN Gopher] Ask HN: Whatever Happened To Freelancing?
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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
Author : tHrOwAwAyXXX900
Score : 148 points
Date : 2023-02-10 12:56 UTC (10 hours ago)
| purpleblue wrote:
| 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.
| djha-skin wrote:
| 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.
| haspok wrote:
| Poster is in the UK (or Ireland). Recommending going to New
| Mexico sounds funny :)
| etothepii wrote:
| 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.
| jaywalk wrote:
| 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.
| zharknado wrote:
| 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.
| ROTMetro wrote:
| You don't go there.
|
| https://cindysnewmexicollcs.com/
| sgt wrote:
| 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.
| rcarr wrote:
| 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
| sdf4j wrote:
| 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
| cjm42 wrote:
| 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)
| rcarr wrote:
| my bad, will make sure to do this next time
| bloaf wrote:
| See also:
|
| https://medium.com/incerto/how-to-legally-own-another-person...
| alex_suzuki wrote:
| 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.
| BigglesZX wrote:
| 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!
| l1silver wrote:
| Can I ask, what was your first step into freelance exactly? Was
| it working with a past client, or something else entirely?
| Silhouette wrote:
| _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.
| [deleted]
| MisterBastahrd wrote:
| 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.
| nickdothutton wrote:
| 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.
| TheRealDunkirk wrote:
| 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.
| [deleted]
| la64710 wrote:
| 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.
| erksa wrote:
| > 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.
| quetzthecoatl wrote:
| >I'm sure there's a term for all of the de-personalization, but
| I don't know what it is.
|
| deracination?
| ravagat wrote:
| 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.
| vram22 wrote:
| >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)
| marcosdumay wrote:
| 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.
| tqwhite wrote:
| 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.
| Gigachad wrote:
| The more likely scenario is that no one will trust anything
| that isn't verified with your government provided digital ID.
| radu_floricica wrote:
| 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.
| ravagat wrote:
| 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
| lmeyerov wrote:
| - 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.
| tstrimple wrote:
| 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?
| greenyoda wrote:
| 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.
| mock-possum wrote:
| 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.
| brindy wrote:
| 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 PS500 are normal outside of London
| (PS750 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 PS100k (ymmv).
|
| Hope that helps, and hope you work it out.
| Silhouette wrote:
| _However day rates in excess of PS500 are normal outside of
| London (PS750 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 PS750 and your friend's PS750
| might give you _very_ different amounts of real money left
| after taxes and costs.
| blobbers wrote:
| 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.
| jagermo wrote:
| 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.
| faster wrote:
| 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.
| alex_suzuki wrote:
| Why did they want to see your client list? Genuinely curious.
| What a turn-off.
| rdevsrex wrote:
| 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.
| sam0x17 wrote:
| Start an LLC. Now you're a company
| chunk_waffle wrote:
| Start a consulting company. There's no law against having a one
| person company.
| pythonbase wrote:
| 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?
| magicloop wrote:
| 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.
| mixmastamyk wrote:
| 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.
| YuriNiyazov wrote:
| Have you heard of California's AB5? Essentially destroyed the
| freelancer/contractor market in CA.
| OkayPhysicist wrote:
| 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.
| dragonwriter wrote:
| > 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.
| mixmastamyk wrote:
| 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.)
| dragonwriter wrote:
| > 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.
| petercooper wrote:
| 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.
| yread wrote:
| 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.
| wahnfrieden wrote:
| Platforms take rent
| yread wrote:
| and provide value
| [deleted]
| jFriedensreich wrote:
| 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.
| zackmorris wrote:
| 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.
| JEDI-HACKER wrote:
| Consider them as a Union, Lawyer, and a Agent.
| listenfaster wrote:
| 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.
| Demonsult wrote:
| USA. I planned on freelancing my whole career. The cost of health
| insurance ended that about 15 years ago.
| ramphastidae wrote:
| 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?
| j16sdiz wrote:
| 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
| everyone wrote:
| 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.
| azov wrote:
| 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?
| qikInNdOutReply wrote:
| 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.
| StreamBright wrote:
| 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.
| ejb999 wrote:
| 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.
| giancarlostoro wrote:
| > 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?
| jabroni_salad wrote:
| 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.
| swader999 wrote:
| 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.
| psiops wrote:
| 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.
| tengwar2 wrote:
| 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.
| tqwhite wrote:
| 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.
| azov wrote:
| Depends on where you are. California LLCs are at least $800/yr
| and AFAIK don't give you much of a veil.
| dbjacobs wrote:
| 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...
| darod wrote:
| 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
| lowercased wrote:
| 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.
| richiebful1 wrote:
| 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.
| mixmastamyk wrote:
| What are the other benefits?
| justinbaker84 wrote:
| 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.
| intrasight wrote:
| 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.
| notahacker wrote:
| 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
| fxtentacle wrote:
| DE and US are pretty open to just hiring people directly as
| consultants. Must be an UK thing.
| rqtwteye wrote:
| 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.
| danielh wrote:
| 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 (Scheinselbststandigkeit).
|
| 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.
| jagermo wrote:
| Even in DE, there are issues around "Scheinselbststandigkeit"
| if you don't have a UG or something. Most companies prefer to
| work with other companies, even if those have just one
| employee.
| caseysoftware wrote:
| 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.
| jnovek wrote:
| 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.
| JamesSwift wrote:
| 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.
| kypro wrote:
| 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.
| hkgjjgjfjfjfjf wrote:
| [dead]
| chadlavi wrote:
| 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
| blamazon wrote:
| 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.
| Doctor_Fegg wrote:
| It's a limited company in the UK and yes, it's absolutely
| standard practice for freelancers to set one up.
| jabroni_salad wrote:
| 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.
| JonChesterfield wrote:
| 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.
| marcus_holmes wrote:
| 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
| LatteLazy wrote:
| It's doubly ironic as IR35 is specifically designed to ignore
| limited companies etc and force people into "employee" status
| despite them...
| TamDenholm wrote:
| To be clear, in the UK, setting up a Ltd company is incredibly
| simple and easy to maintain.
|
| It costs PS12 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 PS1200-PS1500/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.
| ajb wrote:
| 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.
| TheOtherHobbes wrote:
| 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.
| TamDenholm wrote:
| 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.
| Silhouette wrote:
| 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.
| ghostwriter wrote:
| 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)?
| pjc50 wrote:
| 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 PS13. https://informi.co.uk/business-
| administration/filing-your-an...
| TamDenholm wrote:
| 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.
| moralestapia wrote:
| Can you do that as a foreigner (to the UK)?
| dejv wrote:
| Yes, but opening UK bank account is not that easy without
| your presence there.
| LemmyInThePub wrote:
| > Or you can pay roughly PS1200-PS1500/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.
| Baeocystin wrote:
| 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.
| mandeepj wrote:
| "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.
| santoshalper wrote:
| 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.
| disgruntledphd2 wrote:
| > "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.
| jghn wrote:
| 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.
| janetacarr wrote:
| 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...
| ajb wrote:
| 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
| dmd149 wrote:
| 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/
| logicalmonster wrote:
| 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.
| llampx wrote:
| Where does it go from marketing to lying?
| Smeevy wrote:
| 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.
| cwillu wrote:
| "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."
| logicalmonster wrote:
| > "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?
| cwillu wrote:
| 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.
| logicalmonster wrote:
| 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.
| cwillu wrote:
| 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.
| JohnFen wrote:
| > 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.
| logicalmonster wrote:
| 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.
| JohnFen wrote:
| > 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.
| kmoser wrote:
| 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.
| AndrewKemendo wrote:
| 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.
| badpun wrote:
| 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.
| rossdavidh wrote:
| 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.
| chasing wrote:
| 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.
| EvanAnderson wrote:
| 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...)
| r3trohack3r wrote:
| 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.
| lazyasciiart wrote:
| The liability is that it's tax fraud.
| https://www.businessnewsdaily.com/770-contract-vs-
| employees-...
| bdw5204 wrote:
| 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.
| tonnydourado wrote:
| 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.
| r3trohack3r wrote:
| 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.
| detaro wrote:
| > _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.
| brightball wrote:
| Same. I have a personal S-Corp and haven't ever had an issue.
| rukuu001 wrote:
| 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!
| benjaminwootton wrote:
| 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.
| ModernMech wrote:
| 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.
| Scubabear68 wrote:
| 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.
| newaccount74 wrote:
| 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 2000EUR.
| systems_glitch wrote:
| 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.
| moralestapia wrote:
| >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.
| csomar wrote:
| Check the policy terms.
| Scubabear68 wrote:
| 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.
| sokoloff wrote:
| 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).
| therealdrag0 wrote:
| 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.
| bilsbie wrote:
| What's stopping you from forming your own "body shop"
| corporation?
| r3trohack3r wrote:
| 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.
| ravagat wrote:
| 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
| dheera wrote:
| > 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.
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