I gather this means the contractor gets to add the work they did to their portfolio, even though they may never have contact the end-client directly.

I’ve always wondered about that? I’ve contracted with the same firm for over 2 years non-stop and that has left little time for me to pursue new clients on my own so while my experience and ability is greater than it was 2 years ago, my portfolio is the same. Would it be unethical for me to add the projects that I have done for the firm to my portfolio? The point wasn’t addressed in my contract and I worry that bringing it up to my boss may cause bad feelings and possible less work?

but also, it doesn’t hurt having some big-name clients on your resume.

I gather this means the contractor gets to add the work they did to their portfolio, even though they may never have contact the end-client directly. Makes sense to me, but I can see why some would not like that.

Russell, perhaps I didn’t make myself clear. Generally when freelancing you have a fixed hourly rate for the type of work you are doing — let’s say $50 per hour. This may be your “public” rate (that you advertise to clients) or it may be your “private” rate i.e. the rate you actually get (the amount charged divided by the time spent). With contract work you are less likely to get that “ideal” ($50) figure, as you are typically working over a longer period of time, so you might get $40 per hour. The company you are working for might be paying its regular employees $25 per hour. As you can see, you are getting less than your ideal hourly rate and the firm is paying more that it would to a regular employee.

Working over a longer period of time? Perhaps you mean not getting vacation time. In that case it is better to advise people to consider the cost of vacation time when calculating their bid rate. If by “working over a longer period of time” you mean working hours that aren’t claimed… As a contract you should not be doing that. If a client asks you not to charge for something you should be very lery of that client. Contract work is typically (in Atlanta anyways) paid by the hour. IE, you should be getting paid for every hour you work. This is the definition of hourly pay…

Now of course project bids are different, where you may indeed have to work many more hours than expected, without pay. I did not understand your article to include project bids.

Actually I think that is the problem. It sounds like you are describing the exact opposite of the market I am in. Here is you build your own clients, you are often paid on a project basis, because you are expected to bid total costs. Then you can often work hours outside of the bid, reducing your hourly rate. If you are a contractor, you are paid by the hour, and thus your actual and net rates per hour are the same (not to mistaken for net salary).

If you are referring to working hours that you just don’t report to the client… that’s a really bad idea for a lot of reasons. So I’ll assume you are not talking about that and contracting works on a more project basis in your city ;)

Myself, I’ve only worked two jobs in the past seven years where I was hired on a permanent basis and neither of them lasted as long as some of the contracts I’ve had with companies. Many companies where I work (silicon valley) will let you contract for up to year or longer.

Another benefit of contracting versus full time is that you have a lot more control over your money. As a W4 employee, the government takes a nice big chunk of your income before you even get paid. By contracting you get 100%. You can invest that in capital (software, computer, desk) and write it off when you do your taxes the following year. You can even take that money and invest it, then when tax time comes you’ll have gained some extra money from the interest. This makes a lot of sense when you realize that money that you overpay the government via income tax does not gain interest in the time between when they take it out and when you get your return.

Contracting also helps you build your skills and grow your network. Every time I move on to a new place, I learn so much from the people I work with - whether it be new coding or Photoshop tricks or even just how other businesses are run. I alway leave a contract job with a few more connections than when I started as well.

All of this, and the really hot contracter market in the San Francisco bay area make it a no brainer to contract.

they oftentimes are cheaper for the company overall

Yes this is true. However this does not address my comment, which is that as a contractor you do not, as he stated, often get less than your ideal hourly wage. If you did, then that would make contractors both cheaper overall, and cheaper by the hour; not more expensive by the hour (which is the actual case)

What is the downside for them?
* Contractors are usually more expensive on an hourly basis than a regular employee.

What are the downsides?
* You will generally be paid at a lower rate than your ideal hourly rate.

Where is the extra money going? I know I typically don’t work through middle men (I direct contract), and even when I do, their cut is tiny. If contractors cost more per hour than employees… by logic I should be getting more than my ideal hourly rate (if i was fulltime), unless I have unreal expectations which is another problem entirely.

Yes the taxes are slightly different, but (for me) it’s never been enough to make being an employee an attractive financial decision.

You can’t both have the contractors being more expensive per hour, and getting less money per hour….