There's the "W-2" contractor
The “W-2 contractor” receives the typical IRS W-2 form at tax time and works as a temporary employee of a contract broker or some form of employment agency. The contract broker basically acquires a contract with a client company and hires the contractor to work on that contract for them. Brokers make their money by charging the client an amount over your agreed upon hourly rate. In this form, the contract programmer is a temporary, hourly employee of the broker’s company and this is the form that is easiest for the newcomer to obtain.
And the "1099" contractor
As a “W-2 contractor”, your broker a.k.a.: temporary employer or agency will collect taxes from your paycheck, just as if you were a regular employee. The “1099 contractor”, can still work through a broker, but gets paid on an IRS form 1099 and must take responsibility for paying all applicable taxes herself. This “1099” form is for, in IRS lingo, “Independent Contractors.” Independent contractors have more work to do before they get a contract: they have to market themselves like any other business. This includes brochures, business cards, web sites, networking, etc. They have to consider obtaining more forms of insurance that may include general business liability and errors & omissions insurance. They also generally have to form a corporation in order to work for certain companies. The pay back for this extra work is a higher hourly rate. To the beginning contractor, I always suggest starting out as a “W-2” contract programmer because it is generally the quickest and easiest path to becoming a contract programmer and the best way to determine if contracting is the right career choice.
The "W-2" contractor is like a typical employee...almost
The main differences between a full-time employee and an hourly, contract employee working for a broker are, the contractor:
1) Will probably have to pay for his or her own health and disability insurance, which amounts to very little compared to the increased income one usually sees.
2) Generally gets paid top-dollar for his or her work. Many earn $100 or more per hour for 40+ hours a week.
3) Can take as much time off from work as he or she pleases, while in-between contracts.
4) Has independence from corporate politics.
5) Has the chance to live wherever she wants or live in different places as determined by the particular contract.
6) Is often seen as an expert in his or her field.
More work for “1099" contractor
These points apply to the “1099 contractor” as well, but the “1099" contractor has more work to do in filing taxes, corporate paperwork, advertising and searching for her next contract as opposed the “W-2 contractor,” who basically makes a few calls to her favorite brokers and tells them she is ready for another contract and the brokers do the job-searching for her. Now, everything I’ve said thus far is pretty cut-and-dry, so let’s take a look at a more elusive topic: what qualities make a good contract programmer.
Signs of a good contract programmer
Over the last decade, I have met and worked with many varied computer programmers. From this experience, I have devised the following list containing what I believe makes a good potential contractor programmer. A good contract programmer:
1) Makes computers an avid hobby of his. When he comes home from work he plays with or hacks the computer trying to improve its performance.
2) Tries to learn more about computers than his peers do and he also likes to program the computer to have it do “cool” things.
3) Has often dreamed of being an expert, high-paid computer professional.
4) Has learned how to master the art of studying computer science.
5) Spends his free time reading computer books and magazines — yes kind of geeky!
6) May like to build his own computer systems and enjoys tweaking and upgrading them to extract the most performance from them.
7) Is very professional and humble.
You've got to love to do it!
These really are just some of the basic qualities of someone who loves computers and loving computers is really the main ingredient for a successful career in contract programming. If you don’t love doing it, you will not survive. If you do love it, it will be a joy to go to work every day and to continually update your skills. The computer field changes rapidly and only someone who really loves computers and makes it his hobby will have the desire to continually upgrade his skills and be the best he can be at all times. If you possess most of the seven qualities listed above and like the idea of using your hobby to catapult yourself into a high-paid, fulfilling career, even if the economy is down, you should consider a career in contract programming.
About the Author:
Michael Nigohosian is the author of the award-winning and bestselling series, "The Secret Path to Contract Programming Riches" and instructor for the course "Introduction to Contract Programming". He is also director of Rapid Mastery Technology™ at McGillis, Wilcox, Webster & Co., Inc.™ http://www.mwwcorp.com
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