A few points spring to mind here. First off, you are becoming your own company. You may want to incorporate yourself for tax purposes. Secondly, I'm not a lawyer, nor is there likely to be a lawyer member of PM that is willing to state they're a lawyer and give you legal advice (there may be lawyers, but they're not likely to give free advice, and that's not a slight on the law profession). So you may want to hire one for legal advice on contract law. However, before you do that, it really sounds like you need some project management course. A good intro course into what you need to do was something I took back in University - my "software project course" which did a really good job of talking about getting requirements, documenting what you're going to do, etc., prior to actually doing it. We spent 10 weeks of the course gathering and documenting requirements, 2 weeks coding it, and the last week was finals/presentations. And, to be honest, those ratios are actually not that far off my current experience in the field, 7 years later.

You're describing that you're finding yourself propelled 7-10 years into a drone's future (I would classify myself as a drone for the purposes of this thread - someone working for someone else, not themselves). You have no boss - you are your own boss. You have a client. You want your client happy so you get repeat business. That's called management in most other corporations.

To become an effective manager of a project, you should learn a bit about project management. It's a tried-and-true formula for working through a project, whether that project is organising a Christmas party at work, or it's building a skyscraper. The more money and risk associated with the project, the more important it becomes. CountZero pointed out that you should get all the information first. He's right. You start out with a verbal agreement on concepts, but you end up with a written agreement on concrete statements.

I'm actually taking an e-learning course that my company has given me on CD on project management. There's a lot there. But I can definitely see where it's useful. That may be a bit expensive for you. So, one cheap way to learn this stuff? Get a job doing it. Let someone else pay to train you ;-) Like I said, if you get a regular "drone" job, perhaps in 7-10 years you'll be doing all this stuff, and be better able to handle the responsibilities you're facing.

My brother-in-law started his own company just recently (not in software). He knows the business inside out, the industry he's in - he used to be employed in the field before he struck out on his own. What he doesn't have a clue about, however, is the business of business. If he's not careful, he's going to have his company collapse - from being too successful. ;-) IMO, it's worth it to pay for professional services: lawyers, accountants, etc. And to learn project management.

What I don't want this little rant to do, however, is turn you off your opportunity. You're going to have an old acquaintance as your first client. Getting that initial verbal agreement that some of the code (business-specific) will be his, and some of the code (non-specific to his business) will remain yours, and then getting it written down later when you know more precisely where that split is (but before you start writing anything) will probably be less painful than it could with an adversary that doesn't know you personally. Your acquaintance is looking to you as someone to build a relationship with where there already is something to build upon. So you probably have a fair bit of leeway of good faith upon which to negotiate. But still get it in writing at some point before you turn over the code. Use the proceeds from this arrangement to help pay for some project management course(s), though. It'll be worth it if you wish to continue on your own. :-)

Thank you for your response! I've read through this a couple of times trying to digest everything you've said. I'm always willing to listen to advice, process and evaluate it. And I think what you've given me is good advice, too.

Just a few notes for clarification really. The first is that, even though I am "becoming [my] own company," I'm not really intent on doing this often anytime soon (especially since I have two years of college left), and I don't think it would be fiscally sound to hire a lawyer for such a small, possibly isolated project. Oh, and I don't plan on being like your brother-in-law. I don't have enough guts to think I'm good enough to pull down enough money with my meager skills to survive, much less have the business skills to make it possible. Nope, I actually have a good job this summer (by good I mean I should gain a lot of experience), and plan on "being a drone" when I get out of college, too.

The second is that I don't consider myself an expert on project management, but I have taken a course in my college (called "System Analysis and Design") that was offered by a professor who I respect immensely, and who has had very recent experience in the profession (by that I mean, she isn't just a professor who has been out of practice for the last 20 years, instead she has been doing it for a while, and just this year took a job to teach). Obviously there is ALWAYS room for improvement (in everything anybody does), but at least I'm not walking into the project thinking I'm gonna sit down, start coding, and get it done right.

Once again, I do appreciate your response, it has been helpful, I hope I don't sound as if it isn't helpful. I just thought I'd let you know where I'm actually coming from here, so you don't think I'm some fresh-out-of-college greenhorn striking out on my own into uncharted waters, just waiting to be beat down with experience! :D Thanks again!

    -Bryan

You have a professor who taught a project management course? What's your relationship like with her? Did you ask lots of questions in the course? Does she recognise your face? If so, I highly recommend forgetting you even started this thread here, and just talking to her! She is likely to be your best possible resource on this question. She can help guide you on how to proceed way better than anyone here if only because she's in the same legal jurisdiction as you, so she can tell you what legal advice she was given, how to legally incorporate, etc., or if that really is the best advice.

PS: that course you refer to is precisely the type of course I was referring to, although for me it was called something else. I will wager that it was only a minor intro, but it will suffice for the purposes of working with an acquaintance. If you decide to continue along this road, taking a more complete project management course will serve you incredibly well. If you decide to get a regular job, it is likely going to be a few years before it will serve you at all ;-)

(Assumption: you live in the USA, I'm not at all familliar with other localities...)

Becoming your own company, ie. Incorporating, is actually relatively cheap. To do so, one simply needs to find a lawyer that does this, and pay them. I've had my own corporation setup for about 5 years now, even though I also hold down a "normal" job. Back when I incorporated, it cost less than $700 for the whole setup.

There are several reasons it is a good idea to create a corporation, taxes is one, and protection is the other big one. It protects your client, as they don't have to worry about tax and employment issues that could come up if they did a 1099 type payment. And, it protects your personal assets should something happen in the line of business, and someone wants to sue the corporation (this isn't fool proof, ask the lawyer about the details).

It also frees you up to be able to get or offer other benefits. Buying wholesale is easy, just hand them your corporate tax id number. And in general Companies (ie. people within these companies) are much more at ease when dealing with a corporation than they are when dealing with individuals.

So, just because you don't plan to make this corporation the center of your universe now, I still suggest you look into the benefits that can come from setting it up...

-Scott