I receive these messages in a single email periodically, and have not had time to go through some very interesting messages until now. Here are some comments on recently discussed topics:
Business Structure:
- I consulted "on the side" (up to 1 day per week) for 14 years while in academics and did so as a sole proprietor. I never encountered any problems. I've been a fulltime, self-employed consultant for 6 years. The first 3 were as a sole proprietor, and again, no problems. Our youngest son (a lawyer) advised me to incorporate in order to separate personal assets. I really didn't want to do so, but one has to listen to one's kids! The tax attorney I used recommended an S-corp, which is what I did. Frankly, I'm not sure there's any real advantages, but I think some clients might like it better that I'm a "real" company (even though I'm the only employee).
- When I was a sole proprietor, I was NEVER asked about a "business to business" contract, so I was surprised to read these comments. I suspect that my "n" (number of clients) is sufficiently large as to make my assessment reasonably representative. However, all of my clients are either pharma companies or investment companies/hedge funds who invest in pharma companies, so this may make a difference.
- Incorporating did add some overhead, as I now have a tax attorney, pension attorney, penson actuary, and a CPA who are involved sporadically. However, I have NEVER paid to have an attorney read consulting agreements and, frankly, have never seen the need for this.
- My wife is the "CFO" and does everything using QuickBooks. This works very well.
- There were some messages about employee versus non-employee issues. I don't see an advantage to incorporation versus sole proprietor in this area. However, I suspect that there could be a difference if one is working more like a contractor (a lot of hours for one company) rather than as a consultant. My median number of hours per client (counting only the clients that I work for in a given month) has always been in a very narrow range (3-4 hours), so no one has "accused" me of being an employee.
Finding New Clients:
- When I went fulltime as a consultant, I emailed everyone I knew. I also sent unsolicited letters to companies in my general geographic area (San Diego area + also the SF Bay area). The latter had a much lower "yield", but approximately 5% of such letters led to work. I stopped doing "business development" after the first year, since "word of mouth" and referrals have been adequate since then.
- Someone asked about websites. Mine is very simple and I don't think that it's ever brought me work. But it's nice to be able to refer people to it, since they can get my CV and other basic information there.
Per Hour vs Per Project:
- I strongly agree with the others who have posted. I always work on a "per hour" basis. There are too many unknowns to commit to a "per project" basis, so I do not recommend this.
Other:
- There is a very big difference between consulting I did "on the side" for 14 years (discretionary, no need to be nervous about getting work, having benefits, paid vacation, paid trips to conferences, etc.) and consulting fulltime. It would be good if the planned session for the 2012 ASA meeting highlighted these distinctions.