Switching from salaried to contractor or consultant

[Anonymous]

Has anyone transitioned from W2 employee to contract or consultant work? I’m at a stage where (1) I don’t carry the benefits anymore (2) financially we don’t need both of us to work as much as we do now and (3) I’d like to have more autonomy structuring my time. I love my work and could do it hourly for any number of different businesses, including the one I work for now. I don’t even care if I make less on an hourly basis; I enjoy the work but just don’t want to do it full time. I’ve also been in the salaried part time trap before and don’t want to go there again.

Can any of you speak to making that transition? Are there solid resources online for doing so beyond what a simple google search yields?

[Anonymous]

Do you want to stay with your current client?

Do you want to be an IC, start and LLC, or go through a staffing firm? There are pros and cons to each.

If you want to be an IC, are you able to bring your own computer (equipment) if needed? Do you understand the financial obligations- billing client and doing taxes? You need to use the rule of 2000 hrs. 1 year at full time or 2 and half-time is the limit at many large companies for an IC.

LLC - some large companies won’t work with 1-2 person LLCs because it looks like a back door IC.

Staffing company- do your research. Some screw you over more than others by taking a cut of your hourly. Are you going to be able to work part time or cobble together several projects under that arrangement? It’s possible but it’s a pain for the company and your client so don’t expect people to be excited to support you doing that.

[Anonymous]

I was recently contacted by a recruiter for a 12 month contract. I was going to say no but they pay 150% my current salary. She said some people work contract to contract and use the extra income to take a month or two off in between contracts. While I'm not sure I could be that cavalier about unemployment gaps, the idea sounded wonderful.

[Anonymous]

I work as an independent contractor. I did this so I could be part time and manage easier with school breaks etc. I will flat out say that I could not manage working FT with the school breaks, holidays, etc. I was losing my mind.

I have been doing this job for almost 8 years, have one client that keeps me running and work 20-30 hours a week. You need to compensate for your rate plus all the taxes you have pay, pay them quarterly, and figure out how you want to save for retirement etc. I have a SEP IRA. Also remember things like vacations, holidays etc are unpaid, so add that into your rate. I have my own equipment and a very flex schedule. I really like it.

[Anonymous]

Anonymous wrote:I was recently contacted by a recruiter for a 12 month contract. I was going to say no but they pay 150% my current salary. She said some people work contract to contract and use the extra income to take a month or two off in between contracts. While I'm not sure I could be that cavalier about unemployment gaps, the idea sounded wonderful.

I think the recruiter was indirectly suggesting that you won't always be able to run contracts continuously with no gaps.

[Anonymous]

Anonymous wrote:I work as an independent contractor. I did this so I could be part time and manage easier with school breaks etc. I will flat out say that I could not manage working FT with the school breaks, holidays, etc. I was losing my mind.

I have been doing this job for almost 8 years, have one client that keeps me running and work 20-30 hours a week. You need to compensate for your rate plus all the taxes you have pay, pay them quarterly, and figure out how you want to save for retirement etc. I have a SEP IRA. Also remember things like vacations, holidays etc are unpaid, so add that into your rate. I have my own equipment and a very flex schedule. I really like it.

NP. So what is the rate that you add for all the fringe that’s not included?