Very interesting, but definitely not surprising.

Note: This is U.S. data. Sorry for not clarifying sooner!

“Overall, federal workers earned an average salary of $67,691 in 2008 for occupations that exist both in government and the private sector, according to Bureau of Labor Statistics data. The average pay for the same mix of jobs in the private sector was $60,046 in 2008, the most recent data available.”

And let’s just add insult to injury:

“These salary figures do not include the value of health, pension and other benefits, which averaged $40,785 per federal employee in 2008 vs. $9,882 per private worker, according to the Bureau of Economic Analysis.”

Via Big Government

It’s amazing how some roles have such a big difference in pay, such as Clergy at $70,000 in the government, versus around $40,000 in private sector.

Or Graphic designer at $70,000 versus $46,000 in the private sector.

But maybe the work is different?

I can see that for IT because to me, they’re sort of ambiguous.

IT in general is fairly new as an industry, and we don’t have exact definitions as to what each role does.

A computer systems analyst to someone might be a computer support specialist to another.

But to me, they are two completely different job roles and tasks, which can be subdivided even further depending on what applications we’re talking about.

Then you factor in the actual tasks involved, and setting up a computer for an employee is a different job from doing IT help desk support to troubleshoot a system or any kind of specialized software.

I thought it’d be a fun exercise to do a comparison between working for a company and working for yourself.

Salary:

The general rule of thumb is that you work for yourself if you can make more money — at least increasing your salary by 50%.

So if you normally earned $50,000 before, you should be able to earn at least $75,000 if you go out on your own.

That extra $25,000 is to cover retirement, healthcare and whatever else you have to deal with that a company would handle otherwise.

If it’s for the same amount of money, I don’t really see the point unless you really hate being under someone else’s thumb.

From my perspective:

They used to charge $150 – $180/hour for my services.

I cut out the middleman, and went from earning $30/hour (my employee salary) to $90-$130/hour.

I make more money, and I charge the client less.

Time:

In a lot of cases, you work MORE because you have to do your job and also do all the other tasks in the company like handling the books, reading contracts and dealing with the client directly.

If you run your own business you have to handle everything from vendors to customers to your own employees.

But it’s fulfilling in the sense that you know it’s directly affecting you and your earnings, so you are more motivated to do the work happily.

From my perspective:

It is the total opposite for me.

I actually work less now, than I ever did with a consulting company.

The reason being that I used to work 50-60 hours a week with a consulting company, but was only paid for 40.

I was working all that over time for free, PLUS filling out all those performance tracking and project review debriefings, all of which took

Now, I work no more than what I am allowed to bill, which ranges from 36 – 40 hours a week.

Over time has to be approved directly by the client, or I don’t do it.

And if you don’t want to go on a project that makes you travel a lot, you can say “No, I’m not going.”

With a company, you don’t have a choice.

Healthcare:

Have to cover your own, or get your own private insurance plan.

From my perspective:

Doesn’t really apply to me as I live in Canada. My out-of-pocket expenses are around $600/year which include seeing the dentist twice, and buying prescription pills.

I am actually saving money, because I wasn’t even taking full advantage of the company plan to begin with.

Retirement:

Have to handle it all on your own, but this was sort of what I did before as well — contributed to a retirement plan AND saved on the side.

Office Supplies:

Have to handle it all on your own, but you don’t need much if it’s just you.

And you can buy exactly what you want, instead of bitching about what they bought!

Resources:

You’re the only resource, but there’s an informal network of other freelancers who are more than willing to help you out.

Paperwork, Taxes and Deductions:

Lots of paperwork to deal with for your company is the downside, but now:

• you have control over what is being spent and what isn’t
• you don’t have to deal with someone to approve any purchases
• you benefit directly from the tax breaks, rather than the company taking them

When your laptop dies, you don’t have to ask anyone for approval to get a new one (and by new, I mean refurbished).

So if my laptop dies, I just buy another one under the company.

19% Flat Rate

I think it’s a BONUS that I only pay 19% as a flat rate in taxes for my small corporation’s earnings.

My company can earn up to $500,000 before being charged more, but under $500,000, it’s considered to be a small business.

If I were to earn that kind of money through a company, I’d be paying at least 40% in taxes.

$20,000 in dividends each year

I take the money out as dividends each year, to a maximum of $20,000 (it’s all I need anyway), and as a result, I don’t pay exorbitant personal income taxes.

$20,000 might not seem like a lot, considering that in 2009 I spent around $30,000… however, I also have some of my living expenses written off under the company.

No sales taxes paid & expenses are deducted from gross taxable income

If I buy something for the company, I don’t pay the sales tax AND it’s an expense before taxes for my company, so I save on the income tax as well.

Check out the comparison chart:

Let’s assume I buy a $100 item:

As an individual, I’d pay $113 with 13% sales tax, but under my corporation (if it’s a legitimate expense), I pay $81.

Naturally, I can’t buy anything not related to consulting, so a new wardrobe, or anything that is not used for business, cannot be claimed.

This is also not an excuse to go on a spending spree because of the savings, because you are still spending the company’s money, which is eventually YOUR money and what you buy is not “free”, it’s just cheaper.

This is also the reason why I bought a used minivan instead of a fancy new car for the company.

THE DOWNSIDES

• Fairly risky: may not work for large parts of the year (hello 2009?)
• May have to travel a lot and/or cover expenses which lowers my earnings
• No paid vacation, sick days or leave — it affects your income directly
• Managing myself & the client’s expectations
• Have to do all the work of a company by myself on my off time, for example:

• • Filing taxes and other statements quarterly
  • Bookkeeping — My budgeting spreadsheet comes in handy here
  • Analyzing my cash flow and expected income
  • Invoicing and Accounts Receivables — Making sure I get paid
  • Scheduling — If I travel, I need to make sure I am on top of the bookings

——————————————————————————

So I hope I’ve given a brief but comprehensive Pros and Cons list of both: working for a company or for yourself.

Personally, it’s a much better and easier deal to be a freelancer than to work for a company, especially as an IT consultant who works on projects rather than really being an employee.

I thought it’d be a fun exercise to do a comparison between working for a company and working for yourself.

Salary:

It’s steady income, and you can expect a paycheque deposited into your account bi-weekly like clockwork.

Time:

Sure, you may work some overtime here and there, but for the most part your workweek is pretty good.

35 – 40 hours a week, and you even get paid leave in some cases, like sick days, paid vacation, personal days, or whatever your company might offer.

In consulting, if you don’t have a project, then you’re “benched”, otherwise lovingly referred to as “beached”.. meaning that you sit at home and wait for the next project, but you’re paid to do so.

Healthcare:

Usually covered by your employer, giving you a whole range of great benefits that you otherwise may not have had the cash to pay for.

This I hear, is especially helpful if you live in the States, but not so much in Canada, as we are under the universal healthcare plan.

Retirement:

Again, an employer sometimes generously offers a 100% match!

Which means whatever you put into the retirement plan, they’ll match up to a certain percentage.

If you put in 3% of your salary, they give you 3% — it’s free money and a great perk of working for a company.

Office Supplies:

Need a pen? Paper? Huge industrial photocopier? Scanner? Huge projector? For the most part, everything is available at your fingertips, and if it isn’t, you can request it.

You don’t have to worry about having an office to work at, a good desk, a locked cabinet, buying your own computer or having a chair to sit in.

Resources:

Lots of people around you to pick the brains of, and you can lean and ask for help from anyone in your department. At least, in theory.

Paperwork, Taxes and Deductions:

Automatically taken off your paycheque.

You don’t have to worry about contributing to any of it, the company has everything set up automatically, and they just deliver a summary to you at the end of the year, which makes your taxes super simple.

If you need to change something, you just call HR.

You don’t have to deal with any of the nuances of being self-employed — you get your expenses reimbursed in full with (barely) any questions asked.

THE DOWNSIDES

• Having to work overtime for free (in most cases)
• Lots of seemingly redundant & unnecessary paperwork for performance reviews
• Never having autonomy to do what you want without deferring to your manager
• Office politics are pettier, because you’re all employees jostling for raises
• Not getting reimbursed or paid on time

I think everyone knows what a resume is, so I’m just going to pick at the weak points.

The Basic Bones

The Header:

• Full Name, Designated Titles (MBA, PhD, whatever)
• Telephone Number
• Email Address (Get a GMAIL or regular email address. Please, nothing stupid like “kewlduderawker38417@hotmail.com)
• Title/Role you consider yourself to be (IT Consultant for example)

The Meat:

• Summary of Skills and Certifications (Bullet points, 1 lines)
• RELEVANT Employers, Your Position & 1-2 sentences describing what you did (Fast Food Joints, out. Working in totally different roles/industries, out.)
• Include solid facts (I led a team of 50 employees)
• Include real numbers (As a result, our margins increased by 5% resulting in a $150,000 increase in profits)
• And include big client names if any (So-and-So company as a the Project Lead)
• Be choosy. (No need to put ALL of the employers on there even if they are all relevant.)

The Footer:

• Education (One-liner, please don’t detail that you were Lacrosse Captain and you like to ski while being on the Debate Team unless it’s relevant)
• Technical Skills that are not as important but good to have/know that you have (e.g. Microsoft Project proficient)

Keep it Brief

Short and sweet, and throw in spelled out acronyms of your industry with the acronyms in a bracket after it because a lot of recruiters do a Ctrl + F Find function to search for keywords their client is looking for in a candidate.

Example: Personal Finance (PF)

The actual person doing the hiring is typically NOT the same person who is scanning and filtering all the resumes.

Keep it Professional

No need to get cute. It’s one of those things that COULD go over well with an employer or recruiter, and put you at the top of the pile… but sarcasm will usually get you landed on the bottom of the pile because your resume is your black and white, hard paper copy of you.

And if you get stuck with a recruiter with no sense of humour, you’re risking it.

Keep the format clean

Don’t get fancy with fonts, colours and pictures.

Font sizes should be at a minimum 12 point font, usually in Times New Roman so it’s easiest to read.

Comic Sans in bright neon yellow on white paper will surely get you thrown into the wastebasket. Stick to black and white, this isn’t a creative assignment, it’s your resume.

If they want to see creativity, they’re going to ask for it.

With that being said, I’ve also heard that more creative industries like advertising do appreciate the thought that you put into your snapshot of yourself. Some made scrapbooks with pictures of themselves or a DVD that you popped in to play.

But in the majority of industries, keep it boring and Plain Joe/Jane.

Keep the language plain and simple

“Interacting with multi-logistical APT, BPT and XIO high-efficiency performance vehicles to ascertain the profitability of margins in..“I’m bored and confused already.

Stick to:

“Analyzed profits using X software with these integration points”

Capisce?

The person reading your resume is more than likely going to be a recruiter who doesn’t really know the industry in depth.

She or he, is just looking that you generally fit the profile, and to sort out the ones that don’t into the trash bin with a rejection letter saying: “Thanks but no thanks.”

Don’t irritate them.

Sara made a good point about being out of work for so long

But you have to understand that I am in Canada. I am a Canadian. I am not an American. I don’t live or work in the States.

In Canada, our job market is not as dynamic or as strong as the States for IT. Point blank, it isn’t.

I have seen plenty of jobs and contracts for what I do. I’ve had calls from brokers asking me if I could come and work… but they are all for the States.

I am Canadian. I can’t go over unless I go on a TN visa which will then switch to a H1B if I want to stay as a permanent employee of the company.

I also looked into going over as a corporation, but I’d have to set up a U.S. holding in the States, and/or other really long-winded, full-of-legal-mumbo-jumbo things that aren’t worth it.

My taxes also become really stupid, as I have to make sure to stay a Canadian in all sense of the word so that the States doesn’t start taxing me as a citizen there and making me pay for Social Security when I don’t even have access to any of those services.

And the companies in the States don’t want to deal with the paperwork right now because they think they can find an American.

So really.. it is the Americans who won’t let me in, a specialized IT worker, to fill the glut in the IT market that they are currently experiencing, because of the super high unemployment rate and the lack of IT professionals IN my “specialized” area.

I don’t want to go into more details, but I am not as specialized as what you’re imagining, and there are a LOT of jobs and contracts for my skill set in the States. I am just not able to take them right now.

To be frank, not anyone can just enter my specialized field as a citizen wanting work, unless they want to lie about what they know on their resume.

Someone who was an IT professional in another area for many years, can’t just learn what I do overnight. It takes about 3-5 years, with solid projects to really understand the job.

They also need to be on projects to learn what I do, and unless they join a consulting firm and re-learn a whole other area, they can’t do my job.

So that’s sad that everyone is in an unemployment glut right now, but in what areas? In what industries? Not in mine, for sure.

All the professionals I know in my area in the States are busy as heck and some are trying to take on two projects at a time, which is suicide.

And a lot of fake professionals who pretend they know what they’re doing in my area, tend to f*ck up everything because they’re lying and don’t know what to do.

I’m getting screwed by liars because they get on a project and don’t know what they’re doing. Which causes companies to now mistrust anyone who says they’re an IT professional.

I also don’t see how you can berate me for writing about what I’ve learned on my best job, just because I am currently not on contract.

I can still write about my experiences and what I’ve done, without having a contract, and I find your comment kind of narrow-minded.

It’s also all right, and even expected that freelancing IT professionals don’t have a “job” as you put it every single day.

There are lean years and there are fat years. Everyone knows this. If they don’t like that, they work for a corporation who makes them come into the office and sit in a cubicle for 8 hours, doing nothing, just because they want to see them there.

I prefer to work for myself, and have lean years so I don’t deal with their bullshit.

I HAVE a job.

If someone was with a corporation but not on a project, would you think that they didn’t have a job?

Of course not.

I am working for a corporation now. It’s just MY corporation and I am not on a project at the moment.

I am still getting paid and I am still making my bills, just like they are.

I just get my entire paycheque for the year, at the start of the year, which to some, might count only as “savings”, but that’s my entire livelihood and my cash for the year.

I just get it up front all at once for a year or however long I need to use the money for, rather than spread out over the year, doled out by a company.

The corporation doesn’t manage my money indirectly by giving me paycheques every 2 weeks.

I have manage my money by getting all the cheques at once and being judicial in how I spend it on bills or save it.

The company you work for, can also lay you off once you aren’t on contract any longer and they need to save money to pay for everyone else — accountants, HR folk, salespeople who have traditional “jobs”.

I won’t ever lay myself off from my corporation, I just have to manage the money better.

I also run my own corporation as a freelancer, and day-to-day, I do other jobs in my company such as file my own taxes which I’d have to normally pay an accountant for, do my own books and basically prospect for jobs as a sales person.

In doing so, I save myself $4000 a year (with BF’s help on the French forms) by doing it all by myself.

So if I sound defensive in this post, it’s because I am.

I do get annoyed (not at you specifically, but in general) when I’m being asked if I am working or if I have a job.

I AM working. I HAVE a job. I just own the company and do other functions that would normally be done by other employees.

It doesn’t mean I don’t have a job when I don’t have a contract. It is the life of a consultant.