Mitch's Blog

Finding Short-Term Consulting Projects

admin — Sat, 25 Apr 2009 17:09:21 +0000

I recently wrote a series of three articles for IT Business Edge, an online magazine for technology professionals. By reading these articles, you can learn how to land lucrative short-term (and long-term) assigments using my creative marketing strategies. They have consistently worked for me, and they can work for you.

Once you have read my articles, I encourage you to read my book, watch my DVD, and listen to my CD.

Mitch Paioff

From Unemployed to Self-Employed

admin — Mon, 23 Feb 2009 21:53:17 +0000

Have you ever turned a bad employment situation into an opportunity? Are you in the process of starting your own consulting business? If your answer to either of these questions is “yes”, then I would like to hear from you. In particular, I am looking for inspirational stories that I can share with my readers. Please submit your comments by clicking on the title of this blog post. I look forward to hearing from you!

Mitch Paioff

The Upside of Layoffs

admin — Sun, 15 Feb 2009 03:39:25 +0000

Layoffs, shmayoffs! Getting laid off in 2001 was the best thing that ever happened to me. I couldn’t find a job so I decided to start marketing myself as an independent software consultant. I ended up doubling my income. Eight years later I’m still turning away lucrative projects because I’m just too busy to do them all. After I got up and running, I started helping other computer geeks like me start their own businesses. Then last year I wrote “Getting Started as an Independent Computer Consultant”. It’s based on my eight years of experience managing my own consulting business. It comes with a 75-minute instructional DVD featuring me. Afraid of being laid off? Read my book and watch my DVD and learn how to become successful on your own terms. There has never been a better time to start a consulting business. Why? Because the same companies that are reducing headcounts are having to hire contractors to support, maintain, and improve the systems that they rely on to run their day-to-day operations.

- Mitch Paioff

IT Employment Drops Markedly

admin — Tue, 30 Dec 2008 01:40:13 +0000

On December 10, 2008, the National Association of Computer Consultant Businesses (NACCB) published a news release on their website declaring what most of us already know - the IT employment market is getting worse.

“In November, IT employment dropped by almost 34,000 jobs or .87%—the most significant one month drop in over 3 years.”

There has never been a better time to become an independent computer consultant. While many companies are laying off employees, these same companies are hiring independent contractors to maintain, support, and update systems that run their day-to-day operations.

In my book “Getting Started as an Independent Computer Consultant”, I will explain to you, step-by-step, exactly what you need to know to start your own business. In the DVD that comes with my book, I will show you how to bypass recruiters, agencies, and consulting firms, and negotiate directly with hiring managers.

To order your own copy of my book, please go to:

www.cti-seminars.com/seminars.html

This will be my last blog post for 2008. I wish the best for you and yours in 2009.

Oh, by the way, here is the entire press release from NACCB:

http://www.naccb.org/employment-index/december2008_it_release.pdf

Mitch Paioff, Director, Consulting Training Institute

Rising Unemployment Spurs “Consulting Boom”

admin — Fri, 19 Dec 2008 17:19:34 +0000

As thousands of tech workers join the ranks of the unemployed, many savvy individuals will venture out on their own as independent contractors. Some laid off people are destined to stand in unemployment lines, while others will opt for self-employment. In fact, those who are 50 and over may find self-employment the only option left.

Now is the perfect time to start a computer consulting business. Even as companies reduce headcounts and cut costs, they still need highly skilled technicians to maintain, support, and improve systems that are relied upon for day-to-day operations. These companies are increasingly turning to independent contractors to fill those needs.

Contracting has given me the freedom to shop around and choose projects that interest me. I can turn down the ones that don’t appeal to me. And I take time off whenever I want. It has been a great career choice.

In my new book Getting Started as an Independent Computer Consultant, I show technology professionals how to start, promote, and manage a successful computer consulting business. This book comes with a 75-minute instructional DVD featuring me.

If you are unemployed, or about to become unemployed, I urge you to read my book and watch my DVD. There are opportunities out there. My proven techniques will help you to find those opportunities.

Mitch Paioff

Independent Computer Consultants Prospered in 2008

admin — Thu, 11 Dec 2008 17:28:47 +0000

I am happy to report that 2008 is turning out to be my best year ever as an independent computer consultant. Despite the massive layoffs and sagging economy, I made more money this year than in any of the seven years that I have been doing this. I am hearing similar comments from many of the independent consultants that I coach and mentor. Everyone seems to be busy.

I continue to get calls from recruiters who are looking for technical experts with specialized skills. I would like to refer these recruiters to my friends, but all of them are too busy to consider new projects right now.

If you are unemployed, or about to be unemployed, here is what you should do: 1) buy my book “Getting Started as an Independent Computer Consultant”, 2) reinvent yourself, 3) read my book, 4) watch my DVD, and 5) start aggressively marketing yourself as a consultant using the concepts described in my book.

The paperback version of my book was released on December 12. It includes a 75-minute DVD featuring me explaining how to start, promote, and manage a successful computer consulting business.

I had a great year and I’m looking forward to 2009. I wish you and yours the very best during this holiday season.

Mitch Paioff
Director
Consulting Training Institute

Which is the best arrangement for independent computer consultants – 1099 contractor or W-2 hourly employee?

admin — Thu, 27 Nov 2008 02:06:45 +0000

Many agencies and consulting firms will give you the option of being a 1099 contractor or W-2 hourly employee. The term “1099” refers to the tax form that clients send to their contractors at the end of each calendar year.

Even if you are already incorporated, there may be compelling reasons to choose working as a W-2 hourly employee over working as a 1099 contractor.

If you choose 1099, then you will submit periodic invoices with timesheets and expense reports and be paid as any other vendor would. Terms are typically 30 days.

If you choose W-2, then you will be paid from the company’s payroll system, typically once a week or once every two weeks. You will not need to submit an invoice.

I always try to get hired as a W-2 hourly employee, even though I have my own limited liability company. The rates for W-2 hourly employees are usually 10% to 15% less than for a 1099 contractor. The main reasons to choose W-2 are 1) as a W-2 hourly employee, your employer pays the employer portion of payroll taxes (7.65% of gross pay up to $102,000 for 2008), not you, 2) you will get paid faster, and probably won’t have collection problems, 3) your employer usually pays workers compensation insurance premiums, as well as premiums for liability and other types of insurance, on your behalf, and 4) if the agency files bankruptcy, employees have a higher priority of getting paid than contractors do.

On the other side, if you are an older worker (50+), you can contribute much larger amounts to a solo 401(k) plan as a 1099 contractor than you could as a W-2 employee.

Here are some factors to consider when deciding which option to choose:

• If you are a 1099 contractor, then you will be responsible for all of your own employer as well as employee payroll taxes;

• If you are an employee, then you will only be responsible for employee payroll taxes;

• If you are an employee and are laid off, you should be eligible for unemployment benefits;

• By choosing W-2, your net pay will probably be direct deposited into your checking account;

• Most agencies and consulting firms require proof of liability as well as errors and omissions (E&O) insurance from their contractors. Some even require proof of workers compensation insurance. If you are a W-2 employee, you probably will be covered under your employer’s insurance plans. Check with them to make sure;

• If you choose 1099, you can deduct operating expenses on your tax return, such as supplies and education expenses, in a way that will benefit you.

As you can see, there are many factors to consider.

Here are the federal payroll tax rates for 2008:

• Employer FICA: 6.2% up $102,000 (maximum $6324);

• Employer Medicare: 1.45% no limit;

• Employee FICA: same as employer;

• Employee Medicare: 1.45% no limit;

• Federal Unemployment Insurance: .62% of the first $7,000 in wages, or $43.

You will probably have to pay state unemployment taxes as well. In Colorado (where I live), it is about 3% of the first $10,000 of wages ($300), per employee.

All things being equal, you are typically better off being paid as a W-2 employee than as a 1099 contractor, as long as the rate is the same, or slightly lower. This is because the company that hires you will pay the employer portion of payroll taxes instead of you. They will also pay you quicker and deduct withholding taxes for you. They might even deposit your net pay into your checking account.

If you are incorporated, and paid as a 1099 contractor, here is what you need to do at the end of a calendar year (in mid-December), or quarterly during the year, to comply with government regulations:

• Estimate your net profit for the year (or quarter);

• Issue yourself a payroll check from your corporation, deducting all required taxes;

• Remit the taxes, including withholding, to the government, through your bank, by January 31 (or quarterly);

• Issue yourself a W-2 statement by January 31;

• File payroll tax returns with the government by January 31 (or quarterly).

I don’t mean to confuse you with all of this information. Deciding between 1099 and W-2 is something I have had to consider many times as an independent consultant. You should always consult with a certified public accountant or attorney if you have questions regarding the income tax, legal, and other aspects of this very important issue.

I look forward to reading your comments.

Mitch Paioff, Author, Getting Started as an Independent Computer Consultant

Is errors and omissions (E&O) insurance necessary for independent computer consultants?

admin — Thu, 27 Nov 2008 01:32:01 +0000

Yes, it is. I have been an independent computer consultant for a little more than seven years. I put off buying E&O insurance until about a year ago. Errors and omissions insurance is expensive, and I had been trying avoid that expense.

What I am finding is that more and more consulting firms and recruiting agencies are requiring their 1099 contractors to carry their own E&O insurance, in addition to general liability insurance. This wasn’t the case just a couple of years ago.

Anyone who has been a consultant for more than a week knows that when something goes wrong on a project, the consultants always get blamed, regardless of who really is at fault. I have never been sued and don’t know of any computer consultants who have been sued. But it is best to protect yourself because the worse case scenario could be financially devastating.

I bought my E&O and general liability insurance policies from The Hartford. You can contact Jenny Skalnig at 1-877-853-2582 x4417 jenny.skalnig@thehartford.com for more information.

Some consulting firms and agencies will cover you on their own policies if you are their W-2 employee, but you need to check with them first.

Here are a couple of other sources for E&O insurance:

www.wiredforgrowth.com

www.techinsurance.com

I look forward to reading your comments

Mitch Paioff, Author, Getting Started as an Independent Computer Consultant

What is the best way for me to find a temporary consulting project while I look for a full-time job?

admin — Thu, 27 Nov 2008 01:28:49 +0000

I am frequently asked this question by my readers. The obvious answer is to search the job websites like Monster and Dice for consulting opportunities and apply online. Everybody knows that.

What a lot of contractors and independent consultants don’t realize is that they can bypass the agencies, recruiters, and consulting firms and get hired directly by a client.

Have I done this? Yes! Many, many, many times. I have been a successful independent computer consultant for over seven years. About 30% of my consulting projects have come directly through clients, without any agencies involved. How do I do this?

Cold calling. Yes, cold calling…if you are unemployed or between projects, then you need to get on the phone and start calling complete strangers and ask them to hire you. Getting hired directly by a client, where you bypass the agencies and consulting firms, is the best possible scenario for contractors like me.

I know, you’re probably thinking “Cold calling? That is beneath me! I would never do that!” Well, I am living proof that it works. Some of my best, highest paying consulting projects have come as a direct result of me calling up companies and asking them to hire me.

Another other way to find projects is to 1) create your own website, and 2) advertise on Google’s AdWords. My results using AdWords have been mixed. And it can be expensive. But I have acquired a couple of clients this way. You’re still better off cold calling. It’s effective, and it’s cheap.

I look forward to reading your comments.

Mitch Paioff, Author, Getting Started as an Independent Computer Consultant