September 8, 2010

How to make the switch to contract work

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By Kristen Fife
NWjobs

Q: I work at a very large company. There is no upward mobility in my current career and I've been exploring other career options internally with no luck. I know a lot of people that have left full-time roles at the company and come back as contractors in different roles. How do I go about making this change?

Kristen says: There are basically two types of contractors for many companies. There are 1099 self-employed consultants, and then there are agency consultants (or temporary staff).

In a self-employed model, you will need to set up a contract with your former employer. Most companies have a procurement group that handles setting up external work-for-hire contracts. You will need to have a business license set up with the State of Washington (information is available online at http://www.dol.wa.gov/business/startbusiness.html). Depending on the company, you may need to have a project that you are ready to work on; usually you would find this via your professional network. Generally, with this sort of business model, you will submit a monthly invoice based on the deliverables in the agreed-upon contract.

One of the disadvantages of scope-for-work is that if there are any changes, you will need to work on an addendum to the contract and go through the approval process again. You are also responsible for all your own taxes and overhead. However, you have total control of the project and all profits come directly to you.

The other option is to find companies that already have existing contracts with the firms you are targeting, and work for them either as a contractor or a subcontractor. Generally, you will be paid an hourly wage for all work done. Some companies work on a W2 basis (where they pay all your taxes), and some may be amenable to a 1099 contract, depending on their clients and internal structure. Some may also offer benefits.

You can contact your company’s procurement department to find out which agencies hold contracts with them. Some of them may be tiered by type of business or group (for example, finance may use different agencies than IT or HR). You can also use LinkedIn to find agencies that have your company as a client by using the company’s name as a keyword in the search field.

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