employee vs consultants
Sanford Aranoff
enter into with an employer? The Standard Model is that of
employer-employee. This gives confidence to the employer that the
employee will remain a loyal member of the team, building up the
business. It gives confidence to the employee that the income is stable.
This model does not work for software development, due to the dynamic
nature of software. It is not possible for an employer to properly
anticipate a clear, long-term future for the company that would justify
long-term commitment to an employee. The employee relationship demands
that the employee receive compensation even during slack times. On the
other hand, during heavy times, the employee is expected to work
additional hours without compensation. Not only is this unpleasant, but
it is also ineffective intellectually. Creativity, an essential feature
of software development, cannot be natured under pressure or long hours.
In addition, there is a basic dishonest aspect to the entire
relationship. The offer for employment, implying a long-term
relationship if the employee works satisfactorily, is false, for when
the business changes, the employee must go. The employee works in a
dishonest fashion, in following the company culture, in saying the boss
is always right, and so not speaking the truth about the software being
developed.
The other model is that of the professional consultant. The consultant
is hired with an understanding of the goals of the company and the
project about to be undertaken. Both sides agree in writing to
fundamental terms of the relationship, which include non-disclosure and
not harming the employer by arbitrarily leaving in the middle. The
benefits to the employer are many. Full confidence in the software
developer. The employer can feel that the consultant is more
knowledgeable and capable than he is. This should be the case. Only a
superior consultant should be hired. There are no emotional problems in
this area, as there are with the employee relationship, where the boss
has to feel the project is his baby, and he is the top guy.
Further advantages are budgetary. In slack periods, the consultant will
not work. Again, no hard feelings. If an employee is laid off in a slack
period, the emotions are high on all sides, and it is rare to rehire
such a person. For peak stress periods, the consultant can contact other
members of the consultant organization, such as the Independent Computer
Consultants Association, www.icca.org. The consultant would then
prescreen the candidate, saving the employer the expenses and time of
hiring through placement services or advertising. This way as the
demands of the job increase, the work can get done in a timely fashion.
Time is critical in the computer industry. We are all in a race. If the
other guy gets there first, we lose out. Having the software developers
work as consultants will help in getting the work done fast.
The advantages to the consultant are many. The average annual income is
usually higher. The work relationship is based upon honesty. The
consultant can focus on what has to be done. In addition, the consultant
has the freedom to live a normal life in terms of hours and vacations.
Consider the debates on Delphi vs. VB. Many people wrote saying that
their employers required them to use VB, ignoring their statements that
the employer would be better served by Delphi. If the developer is a
consultant, then he informs the employer his professional opinion that
Delphi is better designed to work with the problem. This would make it
clear, and would work.
We software developers may want to seriously consider these ideas, and
consider joining groups like the ICCA, so that we can unite to do what
is best.
Thank you very much.
Finn Tolderlund
What is the purpose of this post?
Finn Tolderlund
"Sanford Aranoff" <ara...@earthlink.net> skrev i en meddelelse
news:3B603173...@earthlink.net...
Sanford Aranoff
consultant.
ak
news:3B603A17...@earthlink.net...
> To set one's thinking on the future, whether to work as an employee or a
> consultant.
Unfortunately, many - including myself - have learnt the hard way that it is
not an "internal" judgement that decides whether you ***should*** be an
employer or a consultant (e.g. wake up one morning and decide: "hmm, I
think I am going to be a consultant today".) It does not work like that.
The case to decide is simple - Do you have CLIENTS (plural)? If yes - you
are a consultant. Otherwise, consulting for ONE client is basically fooling
yourself that you are indeed consultant (not to mention the tax definitions
of consultants/employees). You see, the issue is one of INDEPENDENCE - and
you cannot be financially independent by having ONE paying client only. Get
and hold at least three happy clients and everything sorts itself out.
Best of luck
AK
Joe Hendricks
> are a consultant. Otherwise, consulting for ONE client is basically fooling
> yourself that you are indeed consultant (not to mention the tax definitions
> of consultants/employees). You see, the issue is one of INDEPENDENCE - and
> you cannot be financially independent by having ONE paying client only. Get
> and hold at least three happy clients and everything sorts itself out.
Number of clients is only one criteria. I believe you CAN have
one client as long as you work offsite at your own office,
spend money on advertising your services, and/or various
other activities that show your independence.
Joe
Edwin Keeton
> >You see, the issue is one of INDEPENDENCE - and
> > you cannot be financially independent by having ONE paying client only. Get
> > and hold at least three happy clients and everything sorts itself out.
> > AK
>
> Number of clients is only one criteria. I believe you CAN have
> one client as long as you work offsite at your own office,
> spend money on advertising your services, and/or various
> other activities that show your independence.
>
> Joe
>
>
least not if you depend on your income to live by. Like ak says, it
makes a big difference psychologically to have more than one client.
Joe Hendricks
> But if you have only one client you are not independent financially, at
> least not if you depend on your income to live by. Like ak says, it
> makes a big difference psychologically to have more than one client.
For a while I was juggling 6-7 clients at a time
and thereby missing deadlines like crazy (big
projects). Right now I have one client, with occasional
feature-addons for old clients. Life is so much more
peaceful ! However I checked with both the state
and feds and my physically separate office locale
covers me completely as a "non-employee" even
with one client in a 12 month period. I have even
canceled our previously profitable yellow page ads
because I just keep having to reject new clients.
But I understand what you mean about the
psychological advantage of multiple clients.
That does make me nervous :)
Joe
John Jacobson
> The other model is that of the professional consultant. The consultant
> is hired with an understanding of the goals of the company and the
> project about to be undertaken.
ROTFLMAO. Thanks, I needed a good laugh.
Kyle Cordes
> is hired with an understanding of the goals of the company and the
> project about to be undertaken.
Uh.... in many cases, it does not in fact happen this way.
Depending on the project, the company, etc., there are advantages each
way to employees vs. consultings.
Having the *right people* is much more important than whether they are
employees or consultants.
--
[ Kyle Cordes * ky...@kylecordes.com * www.kylecordes.com ]
[ Developer, Consultant, Trainer: Java, Delphi, ASTA, etc.]
[ Visit the site for articles, links, BDE Alternatives ]
[ Guide, JBuilder Open Tools, and a Delphi Wiki, and more ]
Joe Hendricks
they mention some of the IRS
criteria for non-employee
status in USA:
- if you hire/pay your own staff
- if you are free to work when you want
- if you can work for whoever you want
- if you work in your own office
- if you work with your own equipment/software
- if you can't be "fired" as long
as you fulfill the contract
I'm curious if what defines an "employee"
vs. "consultant" is sometimes unclear
in other countries as well?
Joe
ak
> > The other model is that of the professional consultant. The consultant
> > is hired with an understanding of the goals of the company and the
> > project about to be undertaken.
>
> ROTFLMAO. Thanks, I needed a good laugh.
The proposition of the pro consultant doing the work based on "payment on
delivery" is more realistic - compared to an agreement of that sort with
employees. So the suggestion in the earlier post (did not read it fully,
though) may, perhaps, be somewhat possible.
However, what really made me laugh was:
>This gives confidence to the employer that the
>employee will remain a loyal member of the team, building up the
>business. It gives confidence to the employee that the income is stable
loyalty, income stability - what a load of hogwash (not referring to the
writer of the earlier post, but to the perceptions in the minds of
employers) - in the earlier days of my career during interviews - the
"employer" represented by yet another employee of the company dishes out all
the loyalty, vision, working culture, and other promise crap - only for me
to realise a few months later that the very same individual who interviewed
you on behalf of the company is either being fired/retrenched or has found
another company to show loyalty to (for a couple of years of course).
No employee will share the vision of and swear alligiance to an employer
unless he/she shares the risks/opportunities of the business. Finish and
"klaar".
Regards
AK
John Elrick
news:3b6106e1$1_2@dnews...
You missed the most important IRS criteria; "If we say so" The actual rules
are so vague that the IRS could claim that your utility company was your
employee if they so desired - there are two criteria that are totally
incomprehensible..
John
Jonathan Wilson
The UK reciently introduced IR35, basically a measure that enabled the
IR (inland revenue) to decide that a "one man LTD. company" was in
fact an employee of the Ltd.s client....
However the guide lines seem to be along those of the IRS... The
porblem being that upto 7 years can elapse where the IR may decide you
are an "employee" and leave you liable to 7 years back tax and NI
(national insurance), in effect upto (approx) 30% of the last 7 years
of the companies earnings.
While introducing this law to statute they explicitly stated that this
"tax measure" did not impact on "employment law" so in effect they can
say you are employed as far as taxes are concerned, but not as far as
rights/holidays/sick pay/cars/etc..
A judical review reciently regarded the new (IR35) law as being valid,
but that should someone be found taxable as such, then the "employee"
could be potentialy liable for the employee's rights.
I feel the general consensus is, If you dont feel that you are "a real
company", except in name... then either drop into employment via sort
term employment contracts, or work your accounts as though you were
employed, ie. pay the tax/NI and drop the dividends... but with
carefull planing it's possible to almost claim back all of the day to
day costs of being a company.
I now work form home, although I have only one _very_ part time client
(2-3 hours a week) I am working on an inhouse project, for later sale.
Even when I was consulting full time for 1-2 clients, my ethos was
always as a consultant, not an employee... Which I hope always came
across, but should hold in good stead, along with all the other
issues, to proving that I am/was a "company" not a "disguised
employee".
Thankfully there are 2 or three "departments" who are higher than the
IR inspector, first there is the IR's internal review departments,
then there are the commisioners, then there are the courts.
and from what I hear, the commisioners are reasonably fair in their
application of the "rules", and the courts more often than not find
against the IR in cases of "self employment"
>
>Joe
Jon
--
Integrated 400 Solutions Ltd.
Jonathan Wilson, AS/400 consultant/director
24 Hours: 07775 638904
John Elrick
news:r96jmt4qchppmrkv7...@4ax.com...SNIP
> I feel the general consensus is, If you dont feel that you are "a real
> company", except in name... then either drop into employment via sort
> term employment contracts, or work your accounts as though you were
The IRS tried that one too - they used to operate under the presumption that
unless the law made it easier to collect money, it was an obstacle to be
removed. I seriously believe that if the IRS had perceived the law against
murder as being an obstacle to collections, they would have found a way to
circumvent it.
Three years ago, a million petitioners supported a Bill to sunset the IRC
(Internal Revenue Code) by force - essentially they were so fed up with an
organization that believed it was not only above the law, but was the law,
that they were willing to remove it regardless of the consequences.
The IRS has backpedaled big time ever since.
John Elrick
Jay Boisseau
> The IRS tried that one too - they used to operate under the presumption that
> unless the law made it easier to collect money, it was an obstacle to be
> removed. I seriously believe that if the IRS had perceived the law against
> murder as being an obstacle to collections, they would have found a way to
> circumvent it.
The problem with the IRS is that it is effectively a 4th branch of
government with very little if any checks and balances. Although not an
official fourth branch, it does operate independently for the most part.
This is dangerous.
JB
John Elrick
news:MPG.15da6044b...@newsgroups.borland.com...
Concur.
John Elrick