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Consultants are hired by clients and companies to provide expertise in a specific field or industry. Businesses often hire consultants if they need help with short-term work demands, such as reorganization, training or technical advice. Once a consultant meets the company's needs, his services are no longer required. Consultants often deal with work issues that full-time, non-self-employed, permanent employees don't have to face.
Viable Long-Term Projects
Many consultants face the challenge of maintaining stable, consistent client bases that are able to provide numerous projects throughout the year. In tough economic times, many industries put consulting projects on hold and focus on immediate job demands. If a company is forced to cut back or lay off workers, there isn't usually enough money to hire consultants to address specific projects. Consultants must find ways to survive when they have a feast or famine work flow.
Consultants often design and create copyrighted intellectual property that's useful to clients, such as industry-specific spreadsheets, marketing strategies, or computer models used to run financial scenarios. As a result, consultants must make it clear -- with signed legal documents -- that they own the property and their effort isn't "work made for hire." Otherwise, the client could retain copyright privileges for work the consultant creates for him, says attorney Calvin Sun in TechRepublic.
Consultants may meet with clients face-to-face, but the bulk of the work is often done in another location, possibly even in another city or state. As a result, virtual communication is necessary. Even though email, instant messaging, webinars and social media have made virtual communication possible, time differences, writing styles and the inability to read someone's facial expressions or body language can lead to problems. Consultants might misinterpret client demands or fail to read signals that the project isn't running as smoothly as expected.
Most consultants aren't hired as employees of the company, so their income is treated as self-employment income. If a consultant doesn't have an employer who withholds income tax or makes Social Security payments on her behalf, she must calculate her own taxes and make quarterly payments to the Internal Revenue Service. In addition, she must pay self-employment tax and file additional tax forms, such as Schedule C and Schedule SE, when applicable.
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