Career / Career Progression

5 Challenges to Expect as a Self-Employed IT Pro

by Team Nuggets
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Published on August 7, 2017

When you work as a full-time employee, you rely on your employer to pay your salary each month, withhold your city, state, and federal taxes, keep a steady flow of work coming to you, pay you for vacation and holidays, train you in new technologies, and provide insurance for health care and disability. If you're really lucky, they may also offer a saving plan, so you can provide for your family's future.

But what happens if you choose to take the self-employment route? You'll not only be your own employee, you'll also be your own financial planner, business administrator, and sales and marketing person.

So, let's take a look at five areas that you'll need to take into account should you elect to become a self-employed IT professional.

Income, Expenses, Taxes

Okay, so you want to be your own boss. The first thing to decide is what sort of legal entity you'll be. Will you be a sole proprietor, a general partnership, an LLC, or a corporation? There are all sorts of legal and financial implications to each one. You really should seek advice from a qualified accountant, and probably a lawyer, before you decide.

A sole proprietorship is easy to set up and to end, so let's assume that you start that way. You'll need to keep your business income and expenses separate from your personal expenses, so a separate business checking account is a must.

You'll have to decide how much you're going to charge for your services. Remember that you'll have to earn enough to cover all those extra benefits (i.e., paid holiday leave, insurance, etc.) that you received when you were an employee. Your income must also tide you over during dry spells when you don't have work.

You've completed your first week, or month, or your first project deliverable. Now you'll bill your client for services rendered and they'll cut you a check. Don't spend it all, and remember that Uncle Sam, your state, and maybe your city will want a piece of your pie. Your accountant will be able to tell you how much you'll need to set aside for estimated taxes and when you must send in payments. They can also advise you on your business expenses, including home office, insurances, education expenses, etc.

Business Development

You're working diligently on your client's project, they appreciate what you bring to the table, but your gig could end tomorrow and then you'll be without work and income. Ideally, you'll have advance notice of when an assignment is going to end, so you can begin to network to find another. But why risk it?

Assume the worst and you will not be disappointed. You should ALWAYS be in networking mode. Make sure that you keep your personal website and professional social media information current, sharing your ongoing professional achievements, expertise, and insights.

Be an active contributor to the vendor, user, and industry groups such as the Cisco Support and the Microsoft Communities, as well as the appropriate user groups. Your goal should be to have a network of professional contacts, people who can refer you to upcoming client projects and contracts.

In addition to your own network, check out contract opportunities on employment sites like You can also try freelance websites such as Toptal,, and Upwork, but you'll need to be selective and only bid on contracts that meet your billing rate.

Personal Skills Development

While you've got your head down working especially on long term client projects, the technology might be changing. New releases, new features, even entirely new products can come out! And if your current client is not on the cutting-edge, you run the risk of becoming obsolete. Don't let that happen. Keep your eye on your technology space. A good place to do that is through the CBT Nuggets technology blog and CBT Nuggets training. For the self-employed, a great aspect of CBT Nuggetstraining courses is that you can take them outside normal work hours. You won't lose billable time!

Health and Insurance

And because we're talking about billable time, being self-employed means that if you're not working, you're not earning.

You'll need to plan for insurance for healthcare, as well as for disability. If you've got a family, then you should also consider getting a life insurance policy. Check out organizations like the National Association for the Self-Employed and the Freelancers Union for insurance options, as well as other resources for self-employed professionals.

Financial Planning

Maybe you plan to work forever, but even so, you'll need to plan to build some equity and save for future expenses such as a house, kids, and retirement. Your friendly accountant can advise you on options, such as SEP IRAs, SIMPLE IRAs, individual 401(k)s, etc. Don't put it off. Trust the magic of compound interest and start building your nest egg. Set aside money each month to put into a savings account.

Wrapping Up

Self-employment seems daunting, doesn't it? But many people insist that being your own boss is the best way to work and live. If you're considering taking the plunge, pay close attention to these five challenges and you'll stand a good chance of success.

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