By: P.J. Amys
As the unemployment rate declines, many are taking a look out the window to see if the grass is really greener elsewhere. Certain skill sets in the Midwest and across the US are in high demand. Information Technology, Engineering, Accounting and other highly educated or skilled trades are at the top of the list. People within these occupations may not only consider positions at other companies, but also how they will enter into their next chapter. For most, leaving a full time (permanent or perm) position and going to another perm position is the only method they’ll consider. However, in several industries, it is possible to make more money by working as a consultant or contract employee.
More money? How? Let’s look at IT for example. The IT market is pretty much at a negative rate of employment right now. In other words, there are more jobs than unemployed, qualified people. Does this economic situation ring a bell? Are you flashing back to your high school economics or business teacher? Ah yes. The law of supply and demand! Many companies are so tight on their project deadlines, because they don’t have the necessary resources, they will consider hiring expert consultants on a project or temporary basis to move their work forward. That’s where you come in. If you break down your annual salary to an hourly rate (52 weeks X 40 hours per week = 2080 hours per year), you should make more per hour consulting than in a permanent position. Sound too easy? Well, there are a few more things to consider. Insurance, taxes, PTO and holiday pay need to be taken into consideration. As a consultant, you are responsible for handling or negotiating these aspects yourself.
Independent consultants: As an independent consultant (also known as 1099 or Corp to Corp) you are responsible for withholding your own taxes and holding insurance to protect yourself and your client. Your tax agent can help you set up your business withholdings and expenses. As far as your insurance, talk to your insurance agent about picking up Commercial General Liability and Errors & Omission Insurance. To work with most companies, you’ll need to carry a $1,000,000 policy for each. The last certificate you will need is Workers Compensation. Requirements for this vary from state to state, so your insurance agent will be able to educate you about what’s required in the state you’ll be working in. The last and most important piece you’ll need to know about working corp to corp is how to get paid. This falls on your shoulders as well. You will be responsible for creating your own invoices to send to the person or place you are doing work for. Your tax agent may be able to assist here, but there are quite a few templates for free online. As an independent consultant, you’re not on anyone’s full-time payroll, so holiday pay and PTO are not included. After figuring out your hourly rate from the equation I outlined above, figure out how many hours of PTO and holiday pay you want or think you need and add those dollars per hour into your rate. It sounds like a lot to figure out, but once you do, you’ll easily be able to tweak your hourly billing rate as needed from job to job. If you’re worried about finding your next project, it never hurts to be connected to a recruiting/consulting agency. They will partner with you to find projects and still honor your independent status.
W2 Consultants: If working 1099 sounds a bit too independent for you, consider working with a consulting agency, who will incur these responsibilities and costs for you. They will engage you as their employee, withhold your taxes, carry you under their insurance and depending on the project, you may even receive PTO and/or holiday pay. Keep in mind as they are incurring these costs and burdens for you, they will also pay you a little less per hour for the trouble. Honestly though, if financials are not your strong suit, those few dollars less per hour to have an agency handle your insurance and billing may be worth your time and effort. One of the big advantages of working with an agency is their knowledge of the employers in their market. Their job is to be on top of all companies with their hiring needs. They are paid by their clients for resources, so their efforts for your employment are free.
Do your homework. There are a lot of employment agencies out there. Talk to people you know who have worked with agencies before either hiring from them or being placed by them. They are a large part of today’s employment field and believe it or not, you will know someone who has worked with an agency. Find out how long the agency has been in your local market. The longer they’ve been around the larger their network of clients. As long as you’re researching, take a look at the tenure of their employees. You want to work with recruiters who are happy with the company they work for. Low turnover equals happy employees, right? Naturally, more tenured recruiters also have larger networks in the market to assist them in finding your next employer. You will undoubtedly be recommended to one or two agencies more than any others, so start there. The last thing you want to do is meet with every recruiter in town and have your name and resume spread all over without your knowledge. Stay in control of your situation and make sure the recruiters you work with know they must have your permission to share your resume with any employer. You’d be surprised how many firms don’t bother to educate a candidate about a position before submitting them as a candidate. You will know you’re working with a good recruiter when they explain this won’t happen when working with them.
There’s a lot of opportunity out there now. You owe it to yourself to do some research. You may find your dream job or realize you’re already in it. For additional information on this topic, please contact one of the employment professionals at Palmer Group.