Leaving my current job to start another, but the old job may want to hire me back on as a part time consultant or I may want to put myself out there to consult part time on things that I have picked up from my experiences. The new job is in an unrelated field, so I'm not concerned with violating non-competes. Did you form an LLC or some other entity? How did you decide your rate? Any resources for getting your name out there?
Many companies seem to be going this route lately. My understanding is that you'd need to set up a company (LLC, DBA, etc.), as most businesses will need to pay a "company" for the work. Depending on the line of work, there are resources you can use to learn rates. You can also reach out to a few companies that do what you're doing for a quote. Resources: LinkedIn, SBA, and there are tons of consultant directories and networks. Here's an example from my line of work, https://consultants.apple.com/us/
I've worked on my previous job as a software consultant. They offered me a standard rate (very nice), so I didn't have to do any negotiations. For this type of work, I didn't find setting up an LLC was necessary. However, if you plan to get into it where you are selling your services beyond helping previous employers, I would strongly consider it. At the end of the day though, you can just use yourself as a business, doesn't have to be an officially registered business. That said, the LLC is all about liability. If you plan to do work to which you can be held liable for damages, it will help protect your personal assets. A couple of heads up: 1.) Self-Employment tax - Look into it, you'll be having nothing pulled out of your pay, so you'll need to pay estimated taxes and reconcile at the end of the year on your income tax filing. 2.) Documentation - Document ALL expenses. If you drive, write down your mileage, buy a printer, write it down. Keep a log of everything you do and expense, it will make taxes easier and audits smoother. As for getting your name out there, that depends upon the work you're looking for. A company like my daily job (large corp), will only hire through services, so for us you would need to be part of a consulting firm, and they would be responsible for advertising your services. For a smaller company, I would just look through ads looking to hire. Even if they say full-time, I would call/email/submit resume to offer services as a consultant. So in essence, you're contacting employers for work, not advertising and hoping they call you. Or you could just contact a recruiting firm or two, they usually have all kinds of work, but they will be taking a cut.
I do consulting work part-time within my industry. You'll need to set up an LLC, because most businesses won't 1099 you for consulting work. They want your services to be treated as an expense to a vendor rather than labor to a subcontractor. Not sure why, but I'm not an accountant. It's easy for me because I have no commitment to an employer. I'm not sure I'd like it if one of my employees was doing consulting on the side, especially if it was more lucrative than the wage I was paying them. I'm all for them making extra cash, but at a certain point I would worry about loyalty. My suggestion is to keep it quiet if you can, and if you can't, do whatever you have to do to ensure your current (new) employer is cool with it. Your rate for consulting work is like most services, you can charge as much as you're worth. You can get a guy to play guitar for your party for $100, but if you want John Mayer, it's $100,000. My formula was not terribly pragmatic. I just decided what I'd have to earn to justify my time and expenses, and how much value I felt I could bring to the businesses I'm serving. I used to charge $2000/day plus travel and lodging, but my clients seemed to feel like they were being nickel and dimed with my hotels and rental cars. I'd have people saying I could stay at their house, and drive one of their vehicles. I don't want to deal with that so I just started charging $2500/day all-inclusive and it's worked out well. I usually do two-day workshops, and I realize that $5000 for two days work sounds like a killing, but it's not. There's a lot of work I do besides what happens on site, including prep and continued follow-up. When the smoke clears, I might make $50/hour, but I really enjoy making a difference in someone's business and their life so it's not really about the money. Make sure you consider all the time you're going to be investing, and ensure your compensation is sufficient to justify it. Here's the test, you need to charge enough that you're excited when the client calls. If you under bill, you'll resent the client and the service will suffer. Consulting is like any business, the early days are just about the hustle. You'll have to self promote like a maniac, cold call, email, and network. If the goal is to get your name out there, I would recommend deciding if this is really the path you want to follow, and determine if if can make you a living. I'm kind of an "all or nothing" guy. You should either be an entrepreneur or an employee. One is not better than the other, but they are very different, and I don't think they can live in harmony.
Yes, I formed an S corp instead of an LLC. Did it all myself, it's really just a few forms. I use a CPA firm for taxes and paycycle.com for payroll. Makes it all very easy and legal. Between the 2 I pay around $2k per year for tax and payroll services. Once it's all set-up should take you a couple of hours per month max to stay on top of all your paperwork and tax payments. Finding IT jobs is as easy as posting your resume on Dice and looking for contract opportunities on Dice and other sites. After awhile, every recruiter and their brother will have your resume. As long as you do great work and treat every client as your best reference and easiest resale you should have no problems finding jobs. Of course networking with colleagues and hiring managers will ease this process over time and may be your only route if not in IT or Management Consulting. Try to build up at least 6 months living expenses cash in case a project is suddenly cancelled on you. It makes the uncertain period between contracts much easier. In my 10+ years of independent the longest Ive gone without a contract is about 1 month and all but 1 has been local. Most of the time you get adequate warning to line up the next job and if my current client doesn't extend 6 weeks prior to end of contract then I use that time to line up the next. As far as rates go, I try to undercut the major US based consulting firms but stay well above those with poor English skills. When challenged on rates I sell the value proposition of time spent on a task and quality versus rate.
