Freelance Industrial Automation Engineering and 10 Reasons to Start Today
Here is a Brief Summary of the Benefits of Becoming a Freelance Industrial Automation Engineer.
- Make More Money
- Choose which city to work in
- Work from home
- Combine business and pleasure
- Learn skills that interest you
- Work for multiple clients
- Pay fewer taxes
- Work in multiple industries
- Job Security and Pensions
- The Gig Economy
1. Make More Money!
Freelance Industrial Automation Engineers forgo medical coverage, vacation pay and office infrastructure from an employer. As a result, they can potentially make between 20 and 35% more per hour than their salaried peers. That’s a huge hourly increase for EVERY hour that you work. Your poor staff counterparts are usually not compensated for any hours beyond 40 hours per week.
According to payscale.com the upper salary range for a Industrial Automation Engineer is $121,000 including bonuses.
As a freelance Industrial Automation engineer your salary would now be over $163,000 based on a 40 hour week only. But anyone who works in engineering knows that you rarely work only 40 hours per week. The fact is that most engineers do not get paid overtime.
A quick search on Google for how many hours Industrial Automation engineers actually work each week will show between 40 and 60. If we take the average of 10 extra hours each week and factor that into our new freelance rate of $163,000 per year, our annual income now becomes $203,000 per year! Remember, you get paid for every hour you work, no matter how many.
Make $80,000 more each Year!
Think about what you can do with an extra $80,000 per year. In addition to this new much higher income, you will also pay less income taxes than a staff person. More on that below in reason#7.
There are other factors that will increase your income even further. Working for multiple clients at the same time, for instance. As a freelancer you are no longer restricted to working for just one client. This now creates an opportunity to double-bill. Since you’ll be working most likely on a per-task basis, you can now estimate X number of hours for each task for your client.
For instance. let’s say you were asked to add ladder code and update the HMIs for three new transmitters and you estimated 5 hours to complete it. Your client agrees but you only take 4 hours to finish everything. You completed the work in the time you said it would take, charged them the 5 hours to do it and your client is happy.
Working for more than one client per day increases your hourly rate
Now you have time to do a different task for another client. You do the same thing – you charge 5 hours to complete a task in 4 hours. At the end of this particular day you have charged 10 hours (at a high freelance rate) for 8 hours or actual work. Both your clients are happy as you delivered what they wanted and you only charged them what they were expecting.
This scenario has boosted your already much higher income by an additional 25%. That now brings your annual income from $203,000 to $253,000 per year! That’s an additional $1,320,000 earned over a 10 year period!
If you’re really ambitious you could even consider ‘sourcing’ other freelance Industrial Automation engineers to help you complete work that you don’t have time to do. Take 10% of their rate as a ‘headhunter’ fee and that could amount to an additional $6/hr in your pocket for doing nothing!
Hire other Freelance Industrial Automation Engineers
True, you are going to lose some sick day pay and vacation as well. But for the ‘privilege’ of having a 3 week paid vacation, are you willing to give up at minimum, $80,000 per year? That just doesn’t make financial sense no matter how you spin it.
The fact is your employer is pocketing the vast majority of the money that YOU earn doing work for their clients. They claim they do this in order to provide infrastructure, benefits and job security for you. But do any of those reasons even apply anymore?
2. Choose where you want to live
Past generations were much more inclined to settle into a particular geographic location, build their lives and retire there. They would open a local bank account, buy a house, get to know their neighbors, enroll their kids in school and start ingraining themselves into the community.
But the Millennials and Gen Z crowd are much more nomadic. Because of the way they were raised with major access to the internet and computers, they have a broader worldview. Research has shown that 20% of young people prefer to spend their money of travelling instead of a house down payment. For them, life is more about experiences than planning for the future.
Research shows that 20% of young people prefer travelling to staying put.
Freelancing makes all that very easy. Simply wind down your current project, thank your client and move to Paris. With your new increased income, you have the financial freedom to pick and choose where you work with less concern about the costs involved.
3. Working from Home
In case you were wondering if remote work was a passing pandemic fad, consider that the top keyword search from candidates on Monster. Over the last few months it continues to be “work from home.” Plus, according to other Monster research, remote flexibility was the second biggest policy change reported by employers in 2020.
The pandemic essentially forced many companies to do the unthinkable: manage a remote workforce. To a large extent, it was successful, proving that the work can still get done even without a physical office presence. In other words, even when things return to normal (assuming they will someday), there’s a good chance that many employees will prefer to remain off-site, at least some of the time.
The top Keyword search on Monster is ‘work from home’
Working from home will most likely be on a contingent basis and that translates into freelance Industrial Automation engineering work becoming more mainstream. This trend plays into the other societal changes coming like the gig economy as well as combining professional and personal pursuits.
4. Combine Business with Pleasure
As already mentioned in reason #2, Millennials and Gen Z professionals don’t always subscribe to a traditional career path. Landing a job after collage with a big company that pays a pension and has demonstrated stability doesn’t really exists anymore.
Coupling that with the state of constant fear that our political leaders and media pump 24/7 has made a deep impact on a generation of young people. The older generation adopted a work ethic that assumed a somewhat stable world which in turn allowed for a staged working career. You work hard for 30 or 40 years, save money, keep spending to a minimum, raise the kids, get them off to college and plan for the day you retire.
Mixing business with pleasure means being able to work and pursue your passion – on the same day
That mindset seems to have been lost on the current generation and for good reason. Stable economies, businesses and social norms no longer exists. Which has the effect of encouraging one to live in the here and now. Right or wrong, young people want instant gratification and have very little patience for a long term anything.
According to a recent study conducted by the University of Illinois, it is found that 60% of people around the globe heavily mix their office life or business with pleasure.
Instead of waiting 30 years until you can afford to retire before moving to your dream city, state or country. Do it now as a freelance Industrial Automation engineer. Life is short and there is a very good argument that some things are better when you’re young versus later on when you’re older. Freelancing is the vehicle that will get you there and allow you to make the most of every precious moment.
5. Improve Your Skills
As a freelancer you are now in charge of the unique skills you will require in order to service your clients. As long term staff members we quite often get pigeon-holed into a specific role. Once we get good at our ‘designated’ job managers tend to leave us there. It costs money to train employees and a lot of companies, especially small to medium sized, will avoid it unless absolutely necessary. This leave can leave us with a poor variety of skills sets and that makes for a less than invigorating work experience every day.
Despite so many people being out of work, 87% of employers say they are struggling to fill positions as a result of skills gap, according to Monster data.
As a freelancer, you are now free to train online for anything you deem necessary to expand your marketability. There is currently a huge skills gag within the US workforce. Even with a huge surplus of people looking for work, companies claim they can’t fill positions.
Here are some of the key software skills used by Industrial Automation Engineers.
- MS Excel
- CAD (computer-aided design)
- Ethernet Networks
- Motion Control
Many of these skills can be obtained online working at your own pace for very little cost. See this guide.
Acquiring relevant, key skills translates into a higher chargeable rate for you. This study details how each skill can make you more money. As a freelancer you are no longer limited by what your employer thinks you need to know. You simply signup and do it online.
6. Working for multiple clients as a Freelance Industrial Automation Engineer
By removing the barrier of only working for one company the whole world is suddenly opened up to you. The benefits of working for multiple clients as a freelance Industrial Automation engineer are numerous including.
- greater income by billing multiple clients each month (see reason #1)
- better job security
- choose where you live
- working from home
- work across multiple industries
- improved marketability
- greater flexibility for your time
- way of the future
- wider variety of skills involved
- multiple software packages learned
- get referrals
- create brand recognition
- dynamic learning environment that comes with solving problems for a myriad of clients across multiple industries
7. Pay Less Tax
As a freelancer, you now have the ability to claim business expenses and deduct them from your State & Federal tax returns. It’s recommended that you create an LLC for your freelance career. This can be done online, without a lawyer for less than $300, because setting an LLC is not complicated.
Another huge advantage of having an LLC is that you can now split income with your spouse. By making both of you owners of the LLC, you divide up the revenue and thereby keep both incomes at a lower tax bracket.
For example – if you made $160,000 in Texas, your after-tax, net, take-home pay would be $119,639 if you claimed the entire amount as an individual.
However, if you split the $160,000 income between you and your wife ($80,000 each), your total take-home pay would be $126,436. That’s an extra $6.797 in your pocket each year!
Split Income with your Spouse and pay less tax
Owning an LLC also gives you the ability to write off all expenses related to your new business. With an office at home, there are two methods for claiming expenses.
The Standard Option: With this method, you deduct your actual expenses. You can deduct 100% of some of your home office expenses, such as the cost to paint or make repairs to that specific area. You can also deduct a portion of some overall house expenses based on the area of your home that you use as a home office. For example, if your home office is one-tenth of the square footage of your house, you can deduct 10% of the cost of your mortgage interest or rent, utilities (such as electric, water and gas bills) and homeowners insurance. You can also deduct 10% of other whole-house expenses, such as cleaning and exterminator fees.
You can also deduct a portion of your property taxes and depreciation on the home. Those calculations are complicated, but the instructions to IRS Form 8829 can help. For a list of eligible expenses, see IRS Publication 587. Keep receipts of these expense in your tax files.
Keep more of your own money as a Freelance Industrial Automation Engineer!
The Simplified Option: The IRS introduced a simpler option for deducting home office expenses in 2013. Instead of keeping records of all of your expenses, you can deduct $5 per square foot of your home office, up to 300 square feet, for a maximum deduction of $1,500. As long as your home office qualifies, you can take this tax break without having to keep records of the specific expenses.
This is an excellent article with more information regarding working at home and claiming business expenses.
Industrial Automation Engineer Income Calculation
8. Work in Multiple Industries as a Freelance Industrial Automation Engineer
Working as a freelance Industrial Automation engineer gives you the opportunity to branch out into different industries. Diversification is the key to ensuring continuity of work flow. The first thing a financial investor will advise you do is diversify your investments. Never put all your eggs in one basket. This provides protection for your hard-earned money if one sector takes a nose dive. If that happens (and it does) your other assets will be safe and continue to grow.
The same principal applies for your engineering career as well. The more types of industries you are familiar with, the safer you will be. Your staff counter-parts are completely at the mercy of the winds of change that could wipe out their sector at anytime. When that happens (like it does every 10 years in Oil & Gas) the first response is to find work in a sector that is still doing well.
When an engineer who has spent 10 years or more working in O&G (for example) loses their job and tries to slide into another industry they face several problems.
- no one will hire them since they don’t have any industry-specific experience
- with all their peers also looking for work there is too much competition
- they lack a network of people within the new industry
- no experience with industry-specific software
Multi-industry experience ensures a steady flow of work – no matter what the economy does!
As a freelancer you can obtain the necessary software skills and then reach out to people and businesses outside of your current industry. Doing this prior to a downturn affords you the time to get your ducks in a row.
Your chances of breaking into another industry increase dramatically if your target industry is experiencing a boom. When there is a shortage of talent available companies will consider hiring people from outside their industry. This a prime opportunity to diversify and increase your knowledge base and thereby ensure that you will always have work.
Not only does working in different industries ensure that you will always have work, but it makes life a whole lot more interesting. This also makes you more effective as a problem solver. Sometimes there are solutions in one industry that can also could provide the answer to a complex problem in another. Those with broader industry knowledge quickly distinguish themselves.
Working in today’s volatile, unpredictable economy places huge emphasis on being able to ride out the storm when it happens.
9. Improved Job Security
In the recent past, an educated professional could reasonably expect to land a job with a reputable company and stay there for years. But this scenario is becoming harder and harder to find.
The world of engineering is especially susceptible to economic fluctuations. The main reason being that engineers build stuff and rely on steady expansion. Whether you work in aerospace, automotive, oil & gas, pharmaceuticals or food and beverage, something is being designed, built and produced. This places a huge reliance on the economy, trade deficits and GDP all of which are at the mercy of a myriad of complex factors.
Survey: 42% of Employees Worried About Job Security Due to Spread of Coronavirus
The recent pandemic has added an additional layer of concern for working professionals in every sector. This job killing, industry shuttering, lockdown machine came literally out of no where and caught millions completely by surprise.
When all the factors that can harm our sector are added up, it becomes obvious that instability and uncertainty have become the rule, not the exception. Therefore, one must take control of their own professional destiny. This is the only way to exact a measure of control and counter-balance all the forces that sometimes line up against us.
Freelancing puts YOU in charge of your working career. In the process of creating and running your freelance career, you will be honing your business skills as well. You will learn how to search, connect and network with people and businesses that need your expertise. We will be producing a whole series on how to effectively setup your freelance business with future blog posts.
As a freelance Industrial Automation engineer you will have the ability to ride out economic fluctuations by reaching out to your network of companies. When things go south, not all companies are affected the same way at the same time. You will also have acquired multiple skills and learned key software packages that exposes your eligibility and candidacy to a much wider swath of opportunities. This keeps the money coming in.
As a freelance Industrial Automation engineer you will have the ability to ride out economic fluctuations
Compare a freelancer with multiple sources for work to their staff counterparts who are at the complete whim and mercy of one single source of employment.
Let’s talk about pensions. The days when you could work for a company for 30 or 40 years and collect a nice pension after retiring are long gone. Companies today rarely stay in business long enough to see a working career through to it’s conclusion.
Market volatility, buy-outs, mergers have become the norm in the corporate world. As a result, it’s extremely difficult for companies to manage a pension fund for their retired employees. Companies that do offer a pension are quite often mismanaged. For instance, despite gains in the stock market this year, U.S. pension plans are near their worst financial state in two years, according to the new report by Mercer.
This practice of companies providing pensions is going extinct. This is why working professionals need to be prepared to finance their own retirement. And the best way to do that is to make as much money as possible!
10. The Gig Economy & Freelance Industrial Automation Engineering
It’s a new gig based economy and post-Covid, more people will be working at home and on a per-task basis. This will also open the door for more opportunities to Freelance.
But the Gig Economy has been seeping into our business culture for a while now. Young people were already gravitating towards an open career market when the pandemic lockdowns hit. When that happened the band-aid was finally ripped off as it has now opened the floodgates for a gig based workforce.
The pandemic combined with all the other reasons detailed above will push the trends towards people taking more and more charge of their career destinies and working as independents.
According to research by ProUnlimited, a contingent workforce management software and services firm, it’s expected that over half of skilled workers will be contingent by the end of 2021.
A recent, extreme example of the gig economy in play and just how far it can go is Uber. They have essentially flipped the taxi world upside down and now completely dominate that sector.
Whether or not the world of engineering will ever see that level of upset to it’s workforce is still up for speculation. But at the very least the one thing we do know for sure is that the gig economy is here to stay.
Watch for our next series on How to Become a Freelance Industrial Automation Engineer
By: Steve Novak
I’ve worked for over 30 years as a freelance Industrial Automation Specialist. I created Engineering Job Czar as a Free service for people like us to easily find new ‘gigs’.
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