Consulting "Musts"
Consulting "Musts"
(OP)
I am preparing to move out of State and my employer has inquired if I would be willing to be a consultant after the move. This consulting angle arose after I inquired about telecommuting. I haven't given my resignation yet, but will in a matter of weeks, and my move is common knowledge in the office already. I have never been a consultant, and am curious as to what stipulations are usually covered in a consulting contract. Some topics that come to mind:
Travel
Insurance (dental. health, etc)
Rate
Min/Max hours
Computer/software
My Availability (3 time zone away)
If anyone can offer any insights into these and other topics I have overlooked, please share your thoughts.
Travel
Insurance (dental. health, etc)
Rate
Min/Max hours
Computer/software
My Availability (3 time zone away)
If anyone can offer any insights into these and other topics I have overlooked, please share your thoughts.
"Art without engineering is dreaming; Engineering without art is calculating."
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RE: Consulting "Musts"
RE: Consulting "Musts"
If you go the consultant route, you'll be able to set your own rates, hours, conditions of engagement, etc.; but you won't be able to tag onto their benefits package, most likely. You'll have to create your own, but in the location you're moving to, you'll have some pretty decent, affordable choices for that.
You'll have to get professional liability insurance, general liability insurance, worker's comp insurance (or in your new state you can exempt yourself from worker's comp coverage as a sole proprietor or corporate officer).
As for rates to charge, that's pretty much what the market will bear and what you think is fair. As a starting place, figure at least 2.5 times your hourly rate while at the company. Preferably higher, but that's a starting point for you to consider based on your costs of insurance, downtime, office overhead, general expenses and the like. Keep in mind you'll be paying for all the things that they now pay for (Social security, insurance, etc.)
If you hang out your shingle in your area of expertise, be sure to get licensed in the new state. They frown on doing engineering services without a license. If you go with anything other than practicing under your own name, you'll have to also get a "Certificate of Authorization" for your business entity. That goes for corporations, Professional Associations, LLC's, etc.
Good luck and I hope the transition is smooth. Let me know if there's anything I can do to help.
Ron
RE: Consulting "Musts"
As Ron said, anything is negotiable. I'm currently doing contract work for a previous employer, but I only negotiated a contract with regards to payment for hours worked (i.e. no benefits, travel, etc). They're very flexible with when they can reach me.
My set up is pretty basic. I bought the CAD software that they use (my own expense). They give me milestone dates, and any questions I have, I can call my contact there or send an E-mail. I think that 2.5 times is a little high (for mechanical, at least.) I'm charging 1.5 times the salary I was making while I was there. I also disagree with needing a license. Depending on the circumstances and industry, a license may not be necessary to do CAD work.
I'm pretty new to it, but if you can get away with it (balancing it in your life), the extra money is nice (especially in this economy).
Also keep in mind that I'm referring to product design, which makes it easier (in my opinion) to be a contractor, as you can be given a basic idea, and take it through to release.
V
RE: Consulting "Musts"
RE: Consulting "Musts"
I would be doing product design rather than engineering, but sometimes I have to wonder where that fine line is drawn.
"Art without engineering is dreaming; Engineering without art is calculating."
Have you read FAQ731-376: Eng-Tips.com Forum Policies to make the best use of these Forums?
RE: Consulting "Musts"
You should, if you're working for a former employer, contract with them to have your liability limited strictly to the value of the services you've provided under all circumstances. They don't like your work? You give them their money back. In return, give them a reduced rate for not carrying (expensive and under those circumstances, unnecessary) liability insurance.
To make sure such a mutually beneficial arrangement sticks, consider incorporating. That will separate your assets from those of your business in case of a dispute.
They don't want to agree to that? Charge a higher rate that covers the (substantial) cost of carrying insurance- not just now, but years afterward until the statute of limitations runs out on the work you did and they can no longer sue you. Now do you see why just agreeing to limits of liability is better for you?
Remember that in cases of fundamental breach of contract (ie. gross negligence), liability limits can be set aside- making incorporation even more important.
Make sure your rate covers the costs of all those things that you're going to have to pay out of your pocket now, at a utilization of no more than about 80%. You can bet there'll be some work you'll need to do that they won't let you bill them for.
RE: Consulting "Musts"
get incorporated with an LLC...simple, cheap, provides you legal method of protecting your assets. Might spur you to go further.
Price your time accordingly. The "how to be a consultant" books I have read describe the scenario of prospecting 3 weeks to get 1 week of work. Minus vacations, admin time, etc. The remaining weeks must pay your expenses, including health bennies, retirement funding, insurances, taxes, vacation, kid's college savings, etc. Working for a previous employer in a sweetheart deal is a lot different. The hourly rates will be different. Priced right, this could be lucrative over the long term.
TygerDawg
Blue Technik LLC
Virtuoso Robotics Engineering
www.bluetechnik.com
RE: Consulting "Musts"
RE: Consulting "Musts"
As an IC, you won't be the engineer-of-record for any products you provide, so don't worry about acquiring any professional insurances--You don't need it. Declare yourself as a DBA (doing business as) and you will be afforded all the (tax) advantages that an business entity (LLC, Inc, etc) is is entitled. The only risks are keeping your client/s happy (quality/fee/schedule)and staying busy. Staying busy is the hard part, so I always keep my eyes-ears open for new clients. Be sure to work out a schedule for invoicing and payment.
Good luck,
H.
"Officer, just charge me with the usual."
~Bob Probert
RE: Consulting "Musts"
You stated that as an IC you would not be the Engineer of Record for anything you provide. Not true. Your independent contractor status does not have anything to do with whether the building official or the state licensing board considers you the Engineer of Record or the engineer in responsible charge.
In the US, the independent contractor designation is generally done to satisfy an IRS definition, so that the company can pay you on a 1099 basis rather than considering you an employee.
RE: Consulting "Musts"
RE: Consulting "Musts"
PilotPM, thanks for the further insights. I would be staying with this employer, yes, if there wasn't something pulling me away.
"Art without engineering is dreaming; Engineering without art is calculating."
Have you read FAQ731-376: Eng-Tips.com Forum Policies to make the best use of these Forums?