Got an offer for a contract role that will pay me an hourly rate, I would be making close to 70k more then what I am making currently right now as an salaried employee at Deloitte Are contract roles worth it, the money seems great but kind of worried about the insecurity being a contracted employee. I will get no benefits, besides a little PTO that I negotiate for. Should I make the jump, I would be a W2 employee
Is that factoring in insurance, healthcare, and taxes?
No benefits and that 70k increase was without taxes
Rising Star
You'll pay twice as much for SS and Medicare. You'll lose all PTO and holidays. And have to pay for health insurance. How much does that cost you?
Social security!
There is only one advantage if you can create a sole proprietorship you can defer up to 56k in to a solo 401k tax free. My wife uses this for her private practice.
If you like to be your own boss and work at your terms, it may be worth it. There are a few cons which others have highlighted. On the benefits, you get to chose your work, work for short term contracts and decide to take a break in between projects. If you set up an S Corp, you can get seek some tax benefits e.g home office, car purchase and a few other aspects which you can consider as an expense. Atleast you don’t have to deal with some b**s**t that consultants have to go thru. Initially income can be low. Later on as you establish yourself, you can choose your projects and command a higher rate. I know quite a few people who went independent and aren’t looking back.
What will you be doing in this new role? What industry? Those are sometimes indicators on how long a contract role can last for.
Consider if you will be a 1099 then additional tax you will have to pay, and your own insurance, PTO, etc… me making the math of let’s say going from 100k to 170k… it’s not worth it if it was me.
Got it, I believe I would be a W2 employee
Don’t only look at the salary with rate increase. Also account for health insurance, PTOs, retirement plan, 401k match, health&prod subsidy and a phone if u use D phone as personal. If you are still in 70k positive after accounting for all this, go for it!! Other factor to weigh in is the duration of the contracting position. Is it long term and do u have a runway for a few years. If not, you will be switching projects and contractors don’t make money when they are between projects. at D, you can be on bench for a little while. Every place is insecure- D will also lay you off if business goes bad or u stay on bench for more than 2-3 months.
If on h1, do not go for it. Its a painful situation when you are between two projects.
Get a 1099 instead of we. You can deduct all expenses, 401k, etc and pay taxes on the remaining
I’m thinking of doing this it would be an hourly rate and if I worked 2,000 hours I’d make 120k more than my current job. But I’m allowed to take as much vacation and time off as I want. So I could work 6-9 months a year if I wanted. No health benefits though. Tough call but I kinda wanna do it lol
It’d prob be a short time thing while I figured out a real exit out of consulting though