So, you've decided you want to be a contractor or earn some money on the side. Great! How do you get started? Well, first things first: are you old enough to enter into a legally binding contract? That seems like a silly question but when you consider that in 47 of the states, the age of majority is 18, in Nebraska and Alabama it is 19 and in Mississippi it is 21, it may be something some of you need to know. You cannot sign a contract if you don't meet the minimum age requirement to do so (or are legally emancipated). Can you still do the work? Of course. However, you won't have the benefit of a binding contract to fall back on if things don't work out.
Let's say you're old enough to do this kind of work. The second consideration is: do you possess the maturity and level of expertise necessary to engage in such work? This one is tough for some people to answer because it requires being brutally honest with yourself. If you start talking to someone about building them something that's going to require 20+ hours per week and you work full time, this means when you're done with your full time job, you're still looking at an additional 4 hours per night, every night, or working on weekends to meet the time pledge. While that sounds nice in theory, in practice it can be tough to force yourself to stick with it. Also, if you're discussing constructing the logic algorithms for IBM's next Big Blue supercomputer, for instance...do you really have the skill to do that? Biting off more than you can chew in a contract is THE major reason for the developer defaulting on the work agreement. So, have the expertise and make sure you can dedicate the time you say you can. If you're not certain then play it safe and pass.
I need to mention here that a contractor typically supplies all the work materials needed to do the project. That means a computer, the software you need to do the job and so on...unless the contractee agrees to supply such to you. This is an important point to cover and make sure both sides knows who's bringing what to the table.
Let's assume you're of age, can do the work and have the time and equipment to devote to it. What now? Well, this may sound silly but you (and the contractee) need a definitive description of what's to be built. This is absolutely essential to the process and needs to be explicit down to a moderate level of detail. Consider what you'd get from 10 devs if the order was "build me a website". In order to have all 10 devs come back with essentially the same thing, they'd need a detailed description of what to build, what it will do, how it will function, on what platform(s) and software(s) it will do it's thing and so forth. This leads directly into something called a "statement of work" which defines the work you will do, how you will do it and includes things like deliverables and a timeline. It will also tend to include any detailed requirments, milestones, pricing and so forth. Milestones (a scheduled event signifying the completion of a major deliverable or a set of related deliverables) will help both you and the contractee keep track of the progress of the project, and when combined with periodic payments upon meeting milestones, means you don't end up working too much and then not getting paid. For this reason, milestones should be quite detailed in their description so that there's a reduced potential for dispute whether they've been reached later on.
Outstanding! You have a solid agreement of what's to be built, have agreed on a price or rate per hour and have established concrete milestones for delivery and payment. Are you ready to go yet? Not quite. A lot of developers tend to end the process with diving in and working and hopefully having a pleasant and mutually agreeable end to the contract via delivery of the product and reception of full payment for their services. This is entirely okay however there may be a couple more things you may want to consider.
If you live in the United States you need to consider tax implications. After all, you are doing work for monetary gain which means, legally, you have to report this income to the IRS each April. Anyone legally allowed to work in the United States can simply file it as extra income on their 1040 as an individual. In an above board situation the contractee will send you a 1099 form IF the work you do for them in a calendar year exceeds $600. That is, they prepare a 1099 and send a copy to you and a copy to the IRS. The question often arises though: what do I do if I did work in excess of $600 (per contract) and do not receive a 1099? Legally, you're supposed to report the income on your tax return anyway (and you'll know how much you got by checking your records). If you don't and either you or the contractee are audited you could be found to have committed income tax evasion which can land you in a world of grief. This is more properly a discussion to have with an accountant but safety says to report the income for each contractees (from all contracts for them) that, in total, exceed $600 for the year.
If you plan to do a lot of contracting you might also consider incorporating. Incorporating confers several advantages like limited legal liability, limiting what creditors can collect from you, and you gain access to several tax deductions you might not have as an individual as well as other more obscure benefits. You might be able to write off expenses associated with business done as a corporation and so on. Again, these are considerations best referred to an attorney and/or accountant but it pays to be aware of them. It can be a pain in the ass and expensive to incorporate too so you need to weigh the pros and cons of incorporating...but at least look into it and educate yourself on this option.
I leave the actual contract to last. Most contracts that you will see will be drawn up by the contractee and the vast majority of them are standard legal boilerplate adapted from another contract or pulled down from some site on the internet. Regardless of the source of the wording, it's very important to read and understand the contract you're considering signing. I'll offer a personal anecdote by way of example for why it's important to read the whole contract:
I've been self employed through my own corporation for the past 2-3 years. Around 2 years ago, I was approached by a guy in another state to build him a grass roots political organizing website. Basically a politically themed contact management system with an heirarchy. After we agreed on the basic principle of what it was he wanted and my rate, he emailed me a copy of the contract he wanted me to sign and we made modifications to it several times to reflect the nature of the work we were discussing. We seemed to finally settle on the wording and he sent it back to me one final time for signature. At the time, I owned and ran a website business that had a number of nifty and unique Google mashups and such. This fellow had seen the site (as I discovered via server logs and the like) but had never mentioned that he'd seen it or been there. Anyway, on this last revision he had inserted language into an obscure part of the contract that essentially said that he was entitled to lay claim to ANY work product I produced during the time I was under contract with him regardless of the contractee. What this meant was that he might could have filed suit and demanded work product I produced for other clients or code I built for my own business. I had checked other revisions of the contract and that wording wasn't there so it was something he had tried to sneak in at the last moment hoping I'd miss it. I did not, confronted him about it and he claimed surprised ignorance. It was removed...however, he turned out to be the worst contract I ever worked (so perhaps a word of caution to trust your gut is required here too).
Finally, how enforceable IS a contract. The answer is: not very. You CAN take the other guy to court but the contract will spell out the jurisdiction for any legal disputes. This is an important consideration should the contractee not be located near you. For this reason, your contract NEEDS to explicitly spell out when, how and for what you will be paid...and under no circumstances should you deviate from that. No verbal agreement to modify should be accepted. If the scope of the project balloons then you need to respectfully request that the contract be revisited if for nothing more than to memorialize the changes to the project (delivery times, milestones, rate, statement of work, etc). The final word can come in a court of law and you shouldn't rely upon emails, instant messages or testimony about the contents of phone calls to support your views.
Contract work can be very rewarding professionally and financially provided you know what you're getting into and you prepare properly and professionally. This by no means covers everything there is to consider about contracting but, it's a start. If you've kept reading through this whole thing and have points to add or debate or want to mention an aspect I forget to address, please do so.
This post has been edited by Craig328: 09 February 2011 - 10:23 AM