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I currently have a full-time job, but my company is thinking of turning me into a Contract/Consultant due to the fact that I'm now in a different city and have to work remotely.

I know usually Contract positions are hired through agencies, in this case since I'll be dealing directly with my company, I told them that I'm only going to charge the same amount as if I were to get a Contract job from an agency, this way I'm still getting a competitive rate, and my company gets to pay a lower rate (no agency to collect a cut).

Some background facts:

  1. I have a typical team - some are keener's, others not so much, the tech lead/manager try to do their best to achieve deadlines, which means work load is not always spread out evenly, but this is probably true for any team out there.

  2. I enjoy my work so far as a software developer, I have a lot of responsibilities and I'm handed meaningful work most of the time.

  3. My team members are mostly young, just like me, ideally I'd like to have experienced senior developers/architects on the team to bounce ideas with, but so far that hasn't happened.

  4. Our team produces desktop applications written in c#, this means no web applications are involved, I sometimes wonder if this means I'm "pigeon-holed".

Back to the Contract possibility, I have the following concerns:

  1. Would this actually be a good career move? (this is my biggest concern) As our HR pointed out to me, such a Contract position can be terminated once they decide that I'm not needed anymore, or if the company needs to cut budget, after which I'll have to look for new work, will "Contract/Consultant" on the resume hurt my job-searching? (I'll be doing more architectural / design work once I'm in this new Contract role)

  2. I'll be working remotely most of the time, I wonder if this would hurt or help my growth to be an architect.

  3. Should I be a sole proprietor, or should I get incorporated? What would be the advantage of either?

  4. There will not be any medical/dental/other benefits (basics are covered by OHIP Canada), should I look into buying private insurance? If so how expensive would it be?

  5. My company is looking at putting on restrictions such as: I will not be allowed to work overtime (cannot charge more than the normal # of hours per day), I will need to pay for all expenses (other than equipment) such as travelling and courses <- I'm fine with the 2nd one, is the 1st one normal for Contract positions to be ask to complete your tasks but without any overtime?

Does the above sound familiar to anyone? Any suggestions/advices you can give me on what I should think about / watch out for?

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closed as off topic by maple_shaft Mar 7 '12 at 13:25

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Any chance you could break this up to multiple questions? –  JeffO Dec 3 '10 at 16:25
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In most places in the US, even permanent employees are working on an 'at will' basis, which means that either the employer or employee can terminate the employment at any time and for any reason. The distinction made by 'HR' is likely meaningless to you. –  Adam Crossland Dec 3 '10 at 17:22
    
Um, what is a keener :-/ –  Rig Mar 7 '12 at 13:30

4 Answers 4

  1. stay visible
  2. as a contractor instead of an employee, you will be responsible for your own taxes; your compensation will need to reflect this
  3. contractors typically are responsible for their own benefits - insurance, retirement, etc; take this additional cost into consideration as well
  4. it almost sounds like they're setting up to get rid of you as soon as you can be replaced or your current project is done

Note: there is no reason to change your status from employee to contractor just because you are working remotely. Either someone is mistaken in their beliefs, or there's something else going on that they haven't told you. Tread lightly, and look out for #1!

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Thanks Steven. The reason I got for the status change was that they want to deter other full-time employees from getting the same deal, as far as they're concerned its not easy to manage people when they work remotely. Do you mean look out for #1 where I mentioned I have a typical team? –  codetc Dec 3 '10 at 16:39
    
I stayed a full-time employee for many years despite moving countries, in my previous job! –  Frank Shearar Dec 3 '10 at 17:00
    
+1 for noting that your expenses will go up and so your compensation must go up. Consult a professional account to figure out not only how much taxes for which you will be liable but also the mechanics of how you will pay them. Also, taking care of your own health care can be expensive, and you are not guaranteed to be eligible as with your employer's group coverage. You might want to make sure that you CAN get personal coverage first. –  Adam Crossland Dec 3 '10 at 17:25
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I think he means look out for #1, meaning yourself –  BlackICE Dec 3 '10 at 17:33
    
codetc - the reason they gave you is not a valid reason at all. Many employers would love to have all contractors in some areas. There are a LOT of benefits to an employee and the issue is not about job security as Adam Crossland notes. For example I have heard that a $70k salary position usually means about $90-95k when benefits are taken into account. Doing your own taxes, health benefits, IRA, billing should NOT be underestimated. All these things take time and they're why organizations have departments for personnel, payroll, IRA management, health benefit management, etc. –  Michael Durrant Mar 7 '12 at 15:38

Would this actually be a good career move?

I personally don't think it would matter to future employers that much if you were a contractor or an employee, rather what you did and became capable of doing while doing the work.

I'll be working remotely most of the time, I wonder if this would hurt or help my growth to be an architect.

Having worked remotely on solely my own tasks for the first six months of my current job, I can say I've learned much more about the workings of my company since starting to work in the office. I'm not primarily a programmer so the significance of that is a bit different but you may not be learning as much remotely.

My company is looking at putting on restrictions such as: I will not be allowed to work overtime (cannot charge more than the normal # of hours per day), I will need to pay for all expenses (other than equipment) such as travelling and courses <- I'm fine with the 2nd one, is the 1st one normal for Contract positions to be ask to complete your tasks but without any overtime?

Your own expenses are normal, however if you're billing by the hour they can't expect you to never need to work overtime. So you can't expect to be paid for all your work if you go with this. Sounds like you're getting a bad deal.

Personally, I did not like the uncertainty of working as a contractor. Being from the US, the significant self-employment tax and not having health benefits were also large detriments. I made the transition from contractor to employee and wouldn't want to be the former again.

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No. 2. There are many ways to make contacts and gain experience outside the office. If your new location is limited in IT people, you'll have to network over the web. Your chances of getting promoted in your current firm are slimmer. They may feel more comfortable promoting employees.

No. 5. They want you to actually 'work' overtime, but not bill them for it? Ask that you be paid either by the hours you actually work or the work you complete. Will you have to travel back to your office on a regular basis or do you go to customer locations? The first one may be easier for you to budget, but randomly going to client sites could get costly.

Do you feel like this is something they really want to do?

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Yes I think I'll have to travel back to my office on a regular basis (2 hours away by highway), I'd say on average once a week. –  codetc Dec 3 '10 at 16:46

Would this actually be a good career move? (this is my biggest concern) As our HR pointed out to me, such a Contract position can be terminated once they decide that I'm not needed anymore, or if the company needs to cut budget, after which I'll have to look for new work, will "Contract/Consultant" on the resume hurt my job-searching? (I'll be doing more architectural / design work once I'm in this new Contract role)

I've done both "permanent" and contract work, have not seen that it hurts on the resume. If you have short term contract (I had one that lasted one month) there may actually still be people out there that will ding you in an interview for this, be prepared to explain.

I'll be working remotely most of the time, I wonder if this would hurt or help my growth to be an architect.

Don't know that it would do either. Will probably give you more time to work since you're losing the commute. That could be a good or bad thing.

Should I be a sole proprietor, or should I get incorporated? What would be the advantage of either?

I would definitely look to be some form of corporation, it insulates you from being sued personally and losing your personal property (in U.S.). Make sure checks are made out to the business name, not you personally. You appear to be in Canada, so I don't know the laws or the tax situation there, you will need to look into it.

There will not be any medical/dental/other benefits (basics are covered by OHIP Canada), should I look into buying private insurance? If so how expensive would it be

Yes, there are organizations like NASE in the U.S. for this, find one in your country.

My company is looking at putting on restrictions such as: I will not be allowed to work overtime (cannot charge more than the normal # of hours per day), I will need to pay for all expenses (other than equipment) such as travelling and courses <- I'm fine with the 2nd one, is the 1st one normal for Contract positions to be ask to complete your tasks but without any overtime?

Don't know about overtime, are you talking about getting paid time and a half for over 40? I would think that's unusual on contracts, you should be billing from a corporation, anything you bill would be for same rate. Now not billing over 40 (or whatever) hours I think is unusual. Just don't work more than that, and make sure your estimates are good and you update the estimates when necessary.

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Thank you David for your suggestions. I don't see how I can be sued as a software developer though. –  codetc Dec 3 '10 at 16:58
    
As for the not billing over 40, yes that's exactly the point, they want me to estimate my work and only allocate 40 hours per week for it. –  codetc Dec 3 '10 at 16:59
    
I never have been, but you can be, breach of contract, it has broad reach. If you don't have much in the way of personal property it won't make a difference, but I have house, land, car, etc. –  BlackICE Dec 3 '10 at 17:11
    
Speaking for the US...Since you're a contractor you can be sued just like the company could sue some 3rd party vendor they hire to do a development project. Say the code has some enormous bug that causes people to die or someone to lose a bunch of money or whatever...could be one of a million things. There's liability and risk in everything you do, so create an entity (LLC, Corporation, etc.) and operate solely under that entity. When done correctly, this limits your risk of the company taking personal assets (house, car, cash in the bank, etc.) when they sue you. –  user30117 Mar 7 '12 at 16:57

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