This is a great question. There are enough Ruby/Rails freelancers that we ought to have at least one presentation a year on such topics. But I'm not in charge. :)
I've been a freelancer for 20 years. Before starting with Rails at the end of 2007 I was an "independent contractor". Same difference. When I started I created a California LLC, one of the first in this state. I had to educate bankers and others about what it was. I dissolved it a few years ago when I read that if someone wants to sue you, an LLC (or corporation) is not much protection, they will just name you personally in the suit as well. And if they win and your LLC or corp doesn't have the assets to pay them, they will "pierce the veil" and you're on the hook anyway. So why pay the state $800/yr (and for a corp do all the other things you have to do) if it doesn't protect you? I have clients write checks to me, but register a DBA (fictitious business name) with the county and open a checking account with that if you want. Should you create a business name or just use your own name? Depends on your goals and how you market yourself. It may be good to have a professional-sounding name, but my opinion is that have "Inc." or "LLC" after it is not worth the money. While anyone can sue anyone, I have terms in my standard contract to discourage this. One says I am not liable for consequential damages should I fail to perform in a timely manner, and that my total liability cannot exceed what they have paid me. Another says that disputes will be handled either in small claims court if small enough or by binding arbitration (gotta have that word "binding" in there; a partner once left it out of a contract, so we had to do arbitration and THEN go to court to get paid when they stiffed us, of course we didn't, that would have cost too much). Another says the prevailing party is entitled to attorneys fees. Sometimes clients reject one of these, but not often. My contract also says that either party can terminate it immediately at any time. I can say truthfully that no client has ever terminated a contract and I have never terminated a contract because a more lucrative alternative arose. It's just better for all involved to get a "quickie" divorce if it's not working out. I have terminated clients for being too obnoxious. If you want a copy of my standard contract, write me at scott at railsrescue dot com. An essential business practice is to build up your savings to where you can get through the dry periods and terminate clients if you must. I initially wanted to learn Rails in 2008 on someone else's nickel, but the economy had crashed and I couldn't find a local job. Almost took one over an hour drive each way. Instead I built my own business, learning more as I worked on small projects. Did a lot of "rescue" work on unfinished sites, a great learning path. But I could do this because I had enough savings. For startups and most clients not located nearby (meaning most of them) I work from money they deposit with me in advance. I don't call it a retainer, just a deposit. The contract says it's their money until I do the work. They can start small, see some results, build some trust, and get comfortable depositing more with me over time. I can keep my rates lower because I don't have to chase anyone for money, though I lose some jobs anyway. If a client is local and an ongoing business, I will invoice them afterward, but I keep what I'm owed within small claims court limits. One important "business" aspect that I have learned the hard way is to keep your client's expectations aligned with reality at all times. For example, they want to know how much a site or feature will cost. If they are a prospective client I make it clear that I don't give fixed bids, all work is time and materials, but I can give estimates. All my estimates are ranges. "It could be as much as $____ or as little as $____ and there's some chance it could be outside this range". I try to give the larger number first. People have this funny way of remembering only the first number you give them, and then regarding it as a promise. On your availability and the schedule and everything else, keep them informed! I've had an individual Blue Cross medical policy forever. The deductible is $5,000, but still it got so expensive I changed to one where instead of paying only a copay for all doctor visits, I only get to do that twice a year, then I pay the negotiated rate. I can pay for a lot of doctor visits with the $3,000/year savings. Long ago I hired a CPA to do my business taxes. Then I switched to using TurboTax for Business. Now that my business is just a Schedule C, there's no point. I generated reports in Quicken and use TurboTax. Switched to iBank on the Mac in the last year, I hope it can do the same reports. I contribute the max to an IRA that I manage myself, so that's simple. You can tell, I'm a DIY kind of guy. That wandered a bit, but I hope it's helpful, Scott On Thursday, September 13, 2012 9:59:40 AM UTC-7, Marc L wrote: > > I know we have a lot of current and former freelancers here, who have > taken many different approaches, so here's an open ended question: > > *As a full-time freelancer, how do you deal with the "business" side?* > > Legal structures (1099, sole proprietor, LLC, corp, etc.) > Health insurance > Taxes > etc. > > And do you prefer to DIY or use a professional? > -- SD Ruby mailing list [email protected] http://groups.google.com/group/sdruby
