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Friday, 29 February 2008

Going freelance or not? That's (one of) the question(s)

My sabbatical year ends in one months. During 10 months it was clear to me I would return as an employee, possibly in a 4/5 regime. But february has brought some opportunities to go full-time freelance. So I'm evaluating the possibility this right now.... It would have been easier if I had had these opportunities one year ago, but here I am now with all those questions....

It's not an easy decision. First impact is the salary of course. Will I be able to get enough contracts to survive? I'm not looking to get rich, but a minimum income is necessary of course. And some costs will be added compared to my employee's situation: car, internet connection, mobile phone, servers housing. All these items will cost more if I go freelance. There'll be some "marketing costs' too, in addition to insurance, social security, etc, etc...
On the other hand, if I get lots of contracts, will I still have the time to live a life?

Also, how will I profile myself to prospects? Web developer, database administrator, system administrator, project manager? I love learning new things, so would there be a market if I want to take projects in a domain I don't know yet, but where the customer doesn't find anyone?

And what are the type of contracts that a freelance can get? I'd prefer to not go work 6 months full-time for a customer in a team of 20 developers, but would rather work on smaller-scale and short projects. Isn't that a wrong approach for a freelancer? Won't that approach put me in a market of small companies that don't have the money to invest in such projects?

Another question: during my sabbatical period, I worked quite a lot, but from home, and organising my time as I wanted. Will it still be possible as a freelance? And will I still have the opportunity to put enough time in those projects?

As you see, it's a lot of questions. If you're working as freelance, and you want to share your experience, I'll be happy to read your comments or your mails (sent to rb at raphinou dot com).

9 comments:

Bart Verwilst said...

I have been wondering about the same questions you have now. Being freelance seems pretty neat, and _might_ allow you to earn more than you do at a regular job, but holds a lot more risk and, especially at first, costs you a lot more too. Once you start to sum up what your employer - probably - gives to you, it amounts to a pretty sum. Things like phone(-bills), medical insurance, car, life insurance maybe, free internet, and/or a host of other benefits. You always know up front what you will earn that month, and can't be fired on the spot. There is - at least in my mind - always the little voice saying "ok, you have a dayjob you really love.. But there is so much money flowing around, and with my skills, i might be able to grab some more, and spread Linux awareness in the meantime". It sounds capitalistic, but hey, that's what i'm thinking :)

On the other hand, you can recuperate your taxes on a lot of bills/purchases when you are self-employed, and people will generally be more open to small projects when you have a VATnr :)

In the end, i combined both. I do small projects and VPS hosting ( shameless plug :) ) as second occupation ( "zelfstandige in bijberoep" ), so i can deduct things like my internet bill and electricity, hardware purchases, etc., while still having the security of a fulltime job.

You never know what might change later on, but for now i'm pretty happy with the way things are going :)

Ofcourse, you have to do what feels right for yourself..

My 2 cents,

Bart

elise h said...

Hi Raphael,
i'm going freelance in april, so you can guess what my opinion is :-)
There is a lot of work for the moment, so with your CV there shouldn't be any problem. As Bart says, you can deduce most of your costs.

For what the freedom is concerned: that's why i do it ! The ability to more or less choose what you're going to do the next few months. Of course, depending of the economic climate, there might be times where i have to accept jobs i'm not really interested in.

And also the freedom to organize your own time: even if you work for customers, you have the right to work where you want and when you want, as long as the result is there (otherwise you're a 'faux indépendant' which can put your contractor in trouble for treating you like an employee).

Besides that this status gives you the opportunity to take a break to realize a project (within financial possibilities). Of course during that break you're not paid at all.

That's my impression anyway. I'll let you know if it works out :-)

Elise

Iggy said...

As a freelancer, you can deduct a lot of costs. But, as Bart has already pointed out, you wouldn't have had those costs if you were an employee. (But then again, you can more easily decide where you spend your money.)

You should take this into account when you're deciding on the price of your services.

Most of the extra money you'll make is due to the fact that you no longer have a boss that takes away part of the earnings. VAT deduction also helps.

Setting up a company (BVBA/SPRL) can reduce the amount of taxes you pay. You will need to watch out on which side of the fence (company/private) your money resides. (You can't transfer money without paying taxes on it.)

As a full-time IT consultant, setting up a company is worth the trouble.

Just 2 tips:

1. Do not put your house in the company,
2. Avoid the bureaus that offer to set up a "Limited" (English-style company).

raphinou said...

@bart: I'm also freelance as "bijberoep/complémentaire". Going full-time freelance would enable me to work more on projects like Profoss and MyOwnDB. Even in 4/5 I feel like I wouldn't have enough time to invest in those 2 projects.

@elise: see you at Barcamp Gent to talk about it!

@Iggy:What are the reasons to avoid limited companies?

Thanks for your reactions!

Raph

Iggy said...

@raphinou:

In short: a Limited is an English company. Because of the EU, this company can operate in all other countries as well. Being an English company has a few advantages for the owner. If you search on the net, you can find the companies that will help you set up such a construction and they'll tell you what the advantages are. (IMHO, they're not that big.)

The disadvantages:

- If you're working in Belgium, you'll still have to pay Belgian taxes and conform to Belgian administration rules. In addition, you have to keep up with your UK administration.

- Under Belgian law, a company has to publish certain information (balance sheets). An English company doesn't have this requirement. This may put off potential partners.

wannes said...

The fact that there is no minimum share capital as in a BVBA also may put of potential partners

Serge van Ginderachter said...

I made the step almost one year ago. i'd like to stress I don't see myself as a "freelancer". I associate "free-lancing" with bodyshipping, outsourcing, ... and working in big companies, both of which I dislike.

My thing is supporting small companies, which provides me with tha ability be more independent of which choices I make. I choose strategy. I pick the solutions I want to support.

This modus operandi is more demanding in terms of commercial relationships. You have to sell yourself more than with pure free-lancing. On the other hand, hourly rates are higher than when working for bodysnatchers.

Being independent is not about making more money. If you're successfull, you will make more, but you'll having a bigger responsability.

I for one never looked back and am very glad with my choice. Yes I had a down period when at a certain time my billeable time was down to zero, but that was just a short period.

Before making the step, be sure to have some starting jobs, to have a good social network (which won't be your proble I think) and make sure you have some financial reserves for at least a couple of months.

See you at Barcamp ;-)

Peter Vandenabeele said...

Raph,

When I decided to go from "zelfstandige in bijberoep" to "full-time" with my first bvba "Electronic & Software systems" in April 1996, it was the customer (Wayne from SensArray) that convinced me of the step. At first, I said no, but after a month, I reconsidered and said yes, so I quit my full time job (at Alcatel) and set-up the company.

So, an important lesson: first find a real, paying customer. Once you have that, the choice will be very simple.

If you get into making "serious" money, you should seriously consider a bvba. I have posted as free software a module for calculating and optimizing the tax situation around that (http://taximize.be). It's GPL so I don't consider this a "plug".

The largest risk I see is the one of becoming seriously ill for a long time
("gewaarborgd inkomen"). That is where I would advise a serious insurance. Note that from age 40 (where I am over ... you are not), insurance companies take very extensive exams to allow you in, so make sure you get a serious private insurance for "gewaarbord inkomen" while you are young and healthy and stick to it. I actually carried over that insurance from E&SS, paid for it privately for a few years and took it with me into Mind and then into Vandesco. Always willing to answer questions in private. But the first real serious customer is the most important.

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