So, you think that you know your stuff and have a burning interest in going at it on your own, huh? Well the idea is an appealing one to be sure. But remember that you have to take a lot of the things like 401ks, etc in to account before making the plunge.

A friend recently sent me an e-mail looking for advice on becoming an independent consultant and specifically how to get contracts. I thought this advice might be interesting for others. The e-mail below is unmodified for the most part. He’s an animator and does a lot of stuff in Flash, so this naturally has that twist to it. For Java Developers, just replace Macromedia/Flash stuff with Java stuff.

Any other advice you might have for people looking to become independent consultants?

In general, I find independent consulting a lot more fun than full-time employment. The main benefits of full-time employment are Health Insurance and 401K Plans. Stock options are not a benefit in my eyes. I’ve yet to meet anyone who has made money off stock options as a full-time employee.

The main benefits of being an independent consultant are higher pay and freedom. An experience full-time Java Developer (in Denver) makes around $100K year. I’ve heard of companies hiring employees for $120K, but the most I’ve known anyone to make is $108K. On other hand, a contractor with only a year or two of experience can easily make $55/hour - or $110K year. Experienced developers get anywhere from $75/hour to $200/hour. That’s right folks - $150K year to $400K year! For the higher dollars you often have to travel, which kinda sucks.

People that are full-time employees often like it for the benefits - health care and such. As a consultant, you get to see how screwed up our health care system is and pay for your health insurance out-of-pocket. I’ve seen folks pay anywhere from $250/month to $1000/month for health insurance. We’ve done both (the latter thanks to Corba) and I’m happy to say that we’re paying $250/month now. United Healthcare, minimal plan - but we’re still insured. What about 401K? As an independent, you often will establish your own company, and then you can contribute to an SEP plan. With a 401K, you’re limited to contributing something like $15K/year. With an SEP, you can contribute up to $40K! Granted, you won’t have any employer matching, but you can still plan for your retirement.