Figuring Out Your Billing Rate as an Independent Consultant

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Figuring Out Your Billing Rate as an Independent Consultant

Too many solopreneurs undercharge for their expertise. They don’t know to add a hefty margin to cover things like self-employment tax, business expenses, health insurance, and nonbillable time spent on business administration. Or they haven’t raised their rates consistently over time, or they haven’t switched to a fixed fee. This article explains how to determine your “base rate”, and the external factors that will impact your pricing. …

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5 Steps to Becoming a Millionaire as a Solopreneur

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5 Steps to Becoming a Millionaire as a Solopreneur

Financial stability is one of the top concerns when considering self-employment. Cash flow will be erratic, and it takes time (sometimes years) before you feel confident about making a living as a solopreneur. Becoming a millionaire while self-employed can seem unlikely, yet I did it without really trying. Here are my five steps to becoming a millionaire as a solopreneur.

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To Boost Your Business, Track Your Time (Nearly All of It!)

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To Boost Your Business, Track Your Time (Nearly All of It!)

Management guru Peter Drucker once said “you can't manage what you can't measure.” I prefer to say, “Anything that’s measured can be improved.” By tracking (measuring) how you spend your time, you can increase your effectiveness, your income, and even your quality of life.

Time is one resource that’s truly irreplaceable...once it’s gone, it’s gone for good. Read more for tips on why you should track your time, what time to track, and how to make it happen.

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The PRO Act Will Limit Your Ability to be a Self-Employed Consultant!

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The PRO Act Will Limit Your Ability to be a Self-Employed Consultant!

If you’re self-employed, or thinking about it, or you know someone who is self-employed, THIS IS IMPORTANT! We need to take action now to protect our right to be hired and paid on a business-to-business basis as independent contractors.

On March 8, 2021 the U.S. House of Representatives passed the PRO Act that includes the “ABC Test” that’s part of the controversial California law AB-5. The ABC Test is a huge problem for us as independent consultants because part B states that an independent contractor must perform work that is outside the usual course of business of the hiring entity. This means that as an independent consultant, you can't subcontract to another consulting firm, nor can you hire subcontractors to help you with your own consulting work. Instead, you would have to be hired (or hire others) as a temporary employee on a W-2 tax basis, not on a 1099 tax basis. This is a big deal for us as self-employed professionals because how you are paid affects how much tax you owe…

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Cash Flow Relief for Independent Consultants: the CARES Act & Other Ideas

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Cash Flow Relief for Independent Consultants: the CARES Act & Other Ideas

We’re in an unprecedented situation because of the COVID-19 coronavirus, and the economic fallout has been drastic for many business sectors. For us as consultants, the effects are likely to be more gradual but our income will likely be affected.

This article explains your options for cash-flow relief, whether you need it immediately or in the near future, and how to get it. I have summarized how the new Coronavirus Aid, Relief, and Economic Security (CARES) Act applies to self-employed management consultants, whether you’re a single-person entity (sole proprietor, LLC or S-Corp) or if you’re a small business with employees or subcontractors. However, lawyers and accountants are still reviewing this 880-page law so it will be some time before we know all the specifics. Moreover, how it applies to you will depend on your specific situation. Nonetheless, this summary should help you decide whether to consider pursuing any of these options.

There are several ways to get some cash-flow relief to help you pay your bills in the near term as a result of the $2 trillion CARES Act…

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Avoid W-2 Status and Extra Tax: Become a Licensed Business

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Avoid W-2 Status and Extra Tax: Become a Licensed Business

One of the benefits of being self-employed is paying less tax than you would if you were paid like an employee on a W-2 tax basis. If you’re smart, you’re getting paid on 1099 tax basis, deducting your business expenses, and contributing to your own retirement plan to lower your tax bill. (This two-minute video explains how this works.)

But California’s new law, AB5, is making it harder to qualify as an independent contractor and get paid on a 1099 tax basis. Even if you don’t work in California but do business with a national corporation, you’ll likely have to follow these new rules because …

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How I Became a Millionaire as an Independent Consultant

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How I Became a Millionaire as an Independent Consultant

Recently I logged into my retirement accounts and was surprised (and pleased!) to see that I had crossed the million-dollar mark. I don’t consider myself rich. In fact, money is usually tight at the end of the month. Yet my bank account says I’m a millionaire.

How did I do this? How can other self-employed consultants become wealthy too? Reflecting on my years as an independent consultant, I’ve boiled it down to five keys to success. (Sidebar: People define success differently. To me, having a million bucks in retirement savings is only one part of my total wealth. I also have a comfortable home, I’m healthy, and I have terrific relationships with family and friends. But I digress.)

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How to Figure Out Your Consulting Bill Rate

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How to Figure Out Your Consulting Bill Rate

Dear Liz, 

I have a quick question. I know a consultant who is going to do some work designing a company’s program for high-potential employees. The consultant has talent but not much experience. What hourly rate would you consider low, fair, too high? Can you ballpark this for me?

- Louis

Although the question is brief, a helpful answer is not. Pricing consulting services is notoriously difficult, particularly for self-employed consultants. You need to consider the real and perceived value of your services, expertise, and experience, as well as geography and market conditions. Several factors need to be considered:

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