[zx10guy]

Originally Posted by ddk632

Contract is contract. W2 contract is the same as a 1099 contract but the benefit on W2 is the employer is paying your self-employment tax. Neither one gets paid vacation or sick days. Neither one gets a 401k, nor insurance.

On a 1099, however, you can deduct more. Don't quote me on that but I am pretty sure this is the case. Remember, W2 means you're an employee. Contract or not you're an employee. 1099 you work for yourself and that allows for more deductions of expenses.

This is part of what everyone is telling OP. To compensate for the higher taxes and out of pocket insurance, and still actually feel like OP makes more money, a $20k - $25k annual jump in gross income from salaried employee to contractor (any kind) is minimally necessary. That means after taxes and costs, he sees maybe $10k+/yr more net. That is a noticeable bump.

There is a reason contract rates tend to be higher than their equivalent salaried employee counterparts. There are more costs, more risks, less perceived security, higher turnover rates, and shorter overall gigs than full time jobs. There are also risks of being unemployed between contracts.

One must not shortchange themselves in such a jump and take all this into account. Don't be afraid to ask for what you're worth or what you want. Within reason of course, forget that guy who posted $195k a while back. That being said, it is a negotiation, and you will never get that which you do not ask for.

True, there is opportunity cost of not contributing to the 401k (particularly if you're leaving a fully vested company match on the table) but that money can be invested in IRA and Roth IRA, so not a huge deal. 401k is pre tax now but you pay tax when you cash out; Roth IRA is post-tax but you pay no tax on gains when you cash out eventually. There is always a trade off so it's hard to fully quantify this type of thing.

Hence, from a pure income perspective, unless there is some serious benefit such as better career growth and potential, more family time, hated your old job and no longer to be miserable, etc., a lateral jump (net to net after factoring in taxes and extra out of pocket expenses) usually doesn't make sense. Some bump in income is warranted in most cases.

There are quantifiable aspects to a job move and there are qualitative aspects to same; only the person in question can accurately assess the value of the intangible qualitative aspects as they fit to his or her situation to determine if a lateral jump is worth making.

I've made a lateral jump before, but it was a career move which got me working with newer technology in my industry in a more demanding slice of the field, and has proven to pay dividends in growth in years since.

You wouldn't think that being a Professional Orangeer makes that much of a difference as opposed to a Professional Carrot Juicer; same field, different fruit/vegetable. If not for that move, I'd never have grown into my own Orange Stand and the financial security that comes forthwith.

^This.

I would also assess if the company will extend your contract. Because you might have to factor in having to look for a new job again in a relatively short amount of time.

With respect to 401ks and retirement. The actual max for 401ks is $17,500 a year. It is not based on the company you work for. It is a IRS mandated maximum just like the maximums for IRAs and qualifying factors for Roth IRAs. In your contract situation, as stated above, you will be looking at doing IRAs at $5.5k a year, but if I were you I wold be doing a Roth IRA and forget about a traditional IRA. Doing a traditional IRA does have one benefit which allows you to use the money you put in as a deduction on your taxes.

I don't know what field you're in, but I'm in the IT field. About two years ago, I was working with a tech staffing firm. How this arrangement works is they find a pool of skilled workers and then shop them to prospective employers. They set up the interviews for you with the prospective hiring company. If after the interview the hiring company likes you, you work with the staffing firm to negotiate your salary. This also includes working out any benefits such as paid time off. Health benefits are also discussed negotiated. I don't remember if it's an allowance for you to purchase on your own or if it's purchased from the staffing firm. Once you've negotiated all of these details, you get paid by the staffing firm because technically you're an employee for the staffing firm.

With my situation with the staffing firm, there was a set salary ceiling the hiring company was willing to pay. I got the maximum they were offering for the position. From there, because they liked me so much, I was able to negotiate additional paid time off which wasn't part of the original package. Otherwise, if I wanted time off, it would have been leave without pay situation. And an additional supplement to help pay for health insurance. So they made it where I was getting the maximum salary they were offering and didn't have to take a hit with getting the "standard" benefits. I was also able to do a 401k through the staffing firm but with no company matching. The staffing firm makes their money by charging back to the hiring company a percentage of my negotiated salary. This to me was the best of both worlds where it was a hybrid of working a normal employee type position but more as a contractor.

I didn't take the position though. The term was only 8 months but the hiring company assured me that if I worked out (and they had no reason not to think it would based on my strong technical interview), I would be hired on full time by them. So there was a slight risk I would be looking for a new job again after 8 months. But the hiring company was trying to staff this position for almost a year but couldn't find anyone who could meet the technical requirements. The other issue was the hiring company was going through a major merger. A large foreign company had just bought them out. I was told the parent company would most likely leave the IT department alone. But I was still very uneasy about this. So between the merger and the official 8 month term, I didn't think the risks warranted a job move. Also, with the new position I was going to be taking a $20-30k pay cut from my base pay without factoring in the commissions pay I also get. Why I was considering this move was because I hated the sales environment I was in. Things have changed for the better since then with my current job but I still keep an eye out for new opportunities as I'm a true techie at heart and don't like dealing with the BS which comes with sales.

Sorry for the long winded response but wanted to relay my story as I was in a very similar situation as you.

[pgviper]

minimum $43 / hour. I would push for between $45 and $50 an hour. Worst case scenario they come back with something less and eventually you find a middle ground. Best case scenario, you get what you ask. Nothing wrong with negotiating.

[KingOfJericho]

Make the move to corporate now. I have two experiences that should help you make this decision.

My wife worked in retail for many years (in Manhattan) and took a pay cut to move to corporate. Within two years she was back to making more than she was as a store manager.

My father is a commodities trader. He worked in traffic for many years and was offered a position as a junior trader which would have meant a pay cut at the time. I was just born so he was not able to take the cut at that time and it ended up taking him two decades to make that move. The lost income from not biting the bullet at the time the opportunity arose is likely several million dollars. Point being, you're young and mobile. This is the time to take risks that have higher future earnings potential.

Oh, and retail sucks unless your husband likes to play golf, then please keep working retail. I haven't swung a club since my wife moved to corporate, although every other aspect of our life is better now that she's in corporate.

[P1]

I wouldn't take anything less than $90K when making the switch.

[UncleWede]

Any way you could find a salary range on the company's website?

[Maestro]

ddk632, did a nice summary.

I'll try and put some numbers around this. No one gets free health insurance today everyone is paying something out of their pocket. Even when a company is paying employees pay somethings usually in the $1000 to $5000 range which is tax dedutable by the way. However if you pay outside the company and it does not exceed 7% of you income you can not write it off. Also Beside what you pay the company also pays in the range of $10K to $20K per year. Any policy quoting you $200 to $400 a month is not the same level of coverage you get with your company. If you leave the company is required to offer you COBRA insurance which will running you $1200 to $1800 a month. The cheap plans are just that, they are basic coverage.

Now, you are required to have insurance today thanks to Obama and friends so you have to decide what level you want. If you never go to the dr for anything it the cheapest catastrophic plan you can get, otherwise you looking at something more costly which will depend on you incoming and ability to pay. If this company is more than 50 people they are required to offer insurance it they are not then they could be in violation of the obamacare law.

Since this is a straight pay only job no benefits what so every, you need to be looking at 25% to 50% pay increase to cover the benefits you would cover yourself plus the increase taxes you going have to pay.

[Maestro]

Originally Posted by zx10guy

^This.

I would also assess if the company will extend your contract. Because you might have to factor in having to look for a new job again in a relatively short amount of time.

With respect to 401ks and retirement. The actual max for 401ks is $17,500 a year. It is not based on the company you work for. It is a IRS mandated maximum just like the maximums for IRAs and qualifying factors for Roth IRAs. In your contract situation, as stated above, you will be looking at doing IRAs at $5.5k a year, but if I were you I wold be doing a Roth IRA and forget about a traditional IRA. Doing a traditional IRA does have one benefit which allows you to use the money you put in as a deduction on your taxes.

I don't know what field you're in, but I'm in the IT field. About two years ago, I was working with a tech staffing firm. How this arrangement works is they find a pool of skilled workers and then shop them to prospective employers. They set up the interviews for you with the prospective hiring company. If after the interview the hiring company likes you, you work with the staffing firm to negotiate your salary. This also includes working out any benefits such as paid time off. Health benefits are also discussed negotiated. I don't remember if it's an allowance for you to purchase on your own or if it's purchased from the staffing firm. Once you've negotiated all of these details, you get paid by the staffing firm because technically you're an employee for the staffing firm.

With my situation with the staffing firm, there was a set salary ceiling the hiring company was willing to pay. I got the maximum they were offering for the position. From there, because they liked me so much, I was able to negotiate additional paid time off which wasn't part of the original package. Otherwise, if I wanted time off, it would have been leave without pay situation. And an additional supplement to help pay for health insurance. So they made it where I was getting the maximum salary they were offering and didn't have to take a hit with getting the "standard" benefits. I was also able to do a 401k through the staffing firm but with no company matching. The staffing firm makes their money by charging back to the hiring company a percentage of my negotiated salary. This to me was the best of both worlds where it was a hybrid of working a normal employee type position but more as a contractor.

I didn't take the position though. The term was only 8 months but the hiring company assured me that if I worked out (and they had no reason not to think it would based on my strong technical interview), I would be hired on full time by them. So there was a slight risk I would be looking for a new job again after 8 months. But the hiring company was trying to staff this position for almost a year but couldn't find anyone who could meet the technical requirements. The other issue was the hiring company was going through a major merger. A large foreign company had just bought them out. I was told the parent company would most likely leave the IT department alone. But I was still very uneasy about this. So between the merger and the official 8 month term, I didn't think the risks warranted a job move. Also, with the new position I was going to be taking a $20-30k pay cut from my base pay without factoring in the commissions pay I also get. Why I was considering this move was because I hated the sales environment I was in. Things have changed for the better since then with my current job but I still keep an eye out for new opportunities as I'm a true techie at heart and don't like dealing with the BS which comes with sales.

Sorry for the long winded response but wanted to relay my story as I was in a very similar situation as you.

My wife has works in the staffing industry for the last 20+ year and you painted a nice picture for what is generally know as the meat market.

Your just a whore being pimped out to company who wishes not hire permanent employees for various reason manly the cost of benefits and cost of laying someone off. Depending on the Staffing company and the contract with the end employer will depend on whether you get straight pay or benefits included. Some employers required the staffing company to cover benefits. You also have realize the staffing company is make 10% to 30% of your pay as their fees.

Some people love this work since they can just go from company to company work in the next new things verse staying with one company and dealing with being an employee.