How To Be An IT Contractor

I get asked all the time about being a contractor and specifically how to be an IT Contractor.

Being a contractor in any field I would imagine is pretty similar, but since I am a software engineer by trade, I am most familiar with IT disciplines and thus this is specifically geared toward how to be an IT contractor.

What I hear most frequently, is that people are afraid of the perceived lack of stability and/or gaps in paychecks.

How stable is your job situation these days? Have there been any layoffs at your company? Or in your industry? Or have you already been laid off yourself?

The thing about being an Independent Contractor that is overlooked by that fear based mindset, is the fact that you aren't tied to a single company or source of income.

You can and usually do work for multiple clients in a year, and depending upon your specialty and the type of contracts you take, you may even work for multiple different clients in the same week or day.

Now I'm not going to sugar coat this or lie to you; The fears that people have about gaps in revenue are most likely going to happen to you even if you are at the top of your specialty, but it is manageable.

You can think of contracting as being similar to commission sales in the revenue arena. Your paycheck could be irregular if you are taking the revenue of the business and using that up to pay yourself each and every month.

A better strategy though is to keep some of that cash in reserve and then to smooth out those ups and downs when you are either between clients, or take on a contract that pays a little less or more than your typical rate, or have a client that takes a really long time to pay their bills.

What I do to smooth out those bumps is to pay myself a salary that is less than my revenue minus other expenses, and then I still have some cash on hand to cover any gaps in revenue that may arise.

If you set up a company, like a Corporation or an LLC, then you can pay yourself a salary plus benefits, and then also give yourself quarterly or year-end bonuses if the cash in the business supports it.

That way you also have cash available for any benefits that your company wants to provide to its employees, like health insurance or a company sponsored 401(k) program or any other benefits that you would like to offer to your employees.

And since you are an employee of your company, you then become the primary beneficiary of those programs.

Those are just a few of the many tips that I have learned over the years in my career as an Independent Contractor.

If you found these pointers useful, then you should check out some of my other work where I have the space available to go into much more detail.

I have a free Special Report “5 Tips On How To Work As A Contractor" that you can sign up for immediate download, an eBook entitled “How To Work As A Contractor" that I have published on my site http://www.IndependentContractingResources.com/
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I also have a new course that I have created that is entitled "How To Be An IT Contractor" . The course is all online so you can access it anywhere and anytime that it fits best into your schedule. I has hours of video tutorials, worksheets and checklist that give you the step by step to becoming a successful IT Contractor.