When you decide to become a freelance technical writer you could also get contract work. This means that you work for a client for a specified period of time. You could be a full time contractor working 40 hours a week or a part time contractor working 20 hours a week.
Don’t be deceived by the word full time contract. Even though you’re working 40 hours a week for the client you are not considered a full time employee. You won’t enjoy any company benefits like vacation, health insurance and 401K. And your contract could be terminated without any notice.
Contracts can vary in length from as little as three months to several years long. Some government contracts last for several years. The longer the length of the contract the better it is for you. You won’t have to worry about looking for another client or contract.
As a contractor you will make a lot more money compared to working as a full time employee. In fact you could easily make $15 – $20 more per hour as a contractor than a full time employee.
Why the big difference? Because the company employing you does not pay anything for your health insurance, pension and other benefits. This is a cost savings for them. And in today’s times of skyrocketing health costs, this is a big saving for the company. They’d much rather pay you extra money than pay for your health insurance costs. The extra money they pay you is nowhere close to what they would pay for your health insurance.
Plus, as a contractor they don’t have an investment in you. You get the job done, get paid and say goodbye. That’s it.
As a contract technical writer you could make from $40 – $85 an hour. Depending on your experience and location in the country this number could be higher or lower. Different cities have different rates for technical writers. This depends on the local industries and companies, cost of living and income taxes.
For example, in a growing city like Houston in Texas, the average hourly rate for experienced contract technical writers is $45 – $50 per hour. Compare this to Detroit, Michigan where the hourly rate is $70 – $80 per hour.
The disadvantage of working as a contract technical writer is that you have to get your own health insurance. And if you need health insurance for your family you’ll be paying a lot every month. You’ll also have to set up your own Individual Retirement Account (IRA) account to save for your retirement.
Getting Paid by a Third Company
If you work as a contractor you may get paid by a third company that has a contract with the client. You will be an employee of this third company. Let me give you an example of this.
Say you’re hired by Company A and they’ll pay you $50 an hour to go and work at Company B’s office. Company B is a major Fortune 500 company. It’s a one year long contract. So for every week you work you make $2,000 in pre-tax dollars ($50 an hour multiplied by 40 hours a week).
But you get this money from Company A and not from Company B. Because Company A has placed you in this contract they’ll get their cut too. What you may not realize is that Company A may be billing Company B $80 an hour for you. Company A pays you $50 an hour and pockets the difference.
There are some advantages to being paid by a third party like this. They’ll take care of your payroll taxes so you don’t have to worry about paying Uncle Sam his dues. You’ll submit a W4 to them because they’ll be your employer. They may also have a 401K plan for you to invest in. Some companies also offer decent health insurance options.
There are two other options you have as an independent contractor – doing a Corp to Corp or a 1099. A Corp to Corp involves setting up your own corporation and a 1099 is when you’re the sole proprietor of the business. If you ever get into a situation where these options are available to you then it’s best to consult an accountant.