Author Topic: How to start as an IT/software consultant?  (Read 1048 times)

blurkraken22

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How to start as an IT/software consultant?
« on: November 02, 2020, 05:23:49 PM »
Hello Mustachians,

I have almost 15 years experience working for a software vendor. They are the maker of a ubiquitous data management platform for manufacturing. Please don't guess the company openly, but feel free to PM. :)

I work in customer support: I help customers architect, install, upgrade, maintain, and troubleshoot their systems. I have broad IT skills relative to most of my colleagues within this company, but probably not compared to someone with a few years experience jumping around within IT. I understand how my customers use the product, what kind of projects they typically try to implement with the software, and what challenges they face managing their systems.

There are always plenty of jobs available as a W2 employee for the various customers who use this software, but lately I've been wondering about striking out on my own. Though the company is global, I would like to start my business in the USA.
  • Can you please tell me what I need to think about?
  • What are the required steps before hanging out one's shingle as a software/IT consultant?
  • Do I need to create a corporation?
  • Do I need liability insurance?
  • How do I deal with contracts, invoicing, etc?
I'm pretty sure a few people in this community have started similar businesses. I hope you can help me figure out how it would work. Thanks!

EDIT: Location added.

CowboyAndIndian

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Re: How to start as an IT/software consultant?
« Reply #1 on: November 03, 2020, 08:55:02 AM »
I've been FIRE'ed for almost three years, but in the previous 18 years I was a software consultant with my own company.

To strike out on your own, you would need the following.

  • Contacts in the business or good vendors who can get you new projects.
  • An LLC so that you are protected. I had an S Corp before I switched to an LLC. The LLC was substantially easier to run.
  • Insurance. Liablity and others. Your vendors will specify what you need
  • Bank account for your LLC. Do not mix personal money with company accounts.
  • Maybe you need QuickBooks or some accounting software.
  • Figure out what your hourly/daily rate is. Don't sell yourself short. You are paying the employers half of social security and medicare. You need to add in downtime.

It may sound complex, but it is not. It may add at most 60 minutes/week to do your accounting/invoicing/expenses and LLC related jobs.

After the infamous Microsoft consulting lawsuit in 2000, most companies will not directly hire you but want you to go thru a vendor. So, be ready to shell out about 10% for the intermediate company. If you have such an intermediate company, you invoice them and they will invoice the client.

Feel free to ask any questions. I may take a couple of days to respond as I am spending less time on the site now.


« Last Edit: November 03, 2020, 08:56:50 AM by CowboyAndIndian »

bendixso123

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Re: How to start as an IT/software consultant?
« Reply #2 on: November 03, 2020, 12:41:38 PM »
Does anyone have any advice on doing software consulting part-time or for just a small portion of the year?

The spouse and I are basically financially independent, but I want to work about half the year and make the same payrate. I've wanted to do that for quite awhile now, but most of the contracts I get on have me working at least a year straight.

I figure if I start in July of one year, do a year, then end the following July, that might work. But I would have to time it right.

I'd also like to get away from the compensation being hourly and go for something more results-based. I think what drives me nuts is getting on these projects and watching people basically loafing around, collecting a paycheck, when I know we could bust out something in a few months, and then go work on something else.

I basically want to spend half the year working on my independent game projects, then the other half (or less) doing consulting.