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derekmhewitt
If you've ever thought about doing contract development work this blog post is worth the read.
zimpenfish
There's a third option - an umbrella company. You pay them, they deal with invoicing, taxes, insurance, contract lawyers, and all the guff that could well be financially disastrous if you get it wrong. IMHO 100% worth it.
benhowdle
Author of the post here - that really does sound like a good idea.