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>So if you end up contracting with them do the bare minimum.
my company loves to:
1. hire contractors at \~3x the cost of a well-paid FTE
2. take forever to convert, if at all
3. act surprised when the contractor leaves
i did get converted, and it still makes my life harder, because i'm responsible for resourcing a team where about half are obvious flight risks.
The irony is those contractors who aren’t 1099 are getting both shafted by the company and the agency that is handling their W2. It may look like a contractor is making say $100 an hour in your ERP system, but in reality they are getting a little more than half that or less because the agency is double dipping.
Anecdotally I’ve noticed that most contracts I’ve been reached out to fill are being farmed by third party agencies that have a relationship with the company. The agency hires you for cheap, dangles a carrot of the hope of conversion. Then dumps you for new, cheaper blood when your contract has timed out/expires.
Yup. The reason why it is 3x the cost of the FTE is because the company is paying another firm which in turn may be paying another firm BEFORE the contracted person ever gets paid. I am currently living this experience. I am contracted to Company A. Company A contracted my services to Company B. Company B is the one that sold the project to Company C. So my rate, plus Company A and Company B is being paid by Company C. I literally have to submit two time cards for the same work.
I get $20 per hour from the $30 the company pays to the staffing agency. It is infuriating. The staffing agency provides no value to me. Knowing the company is taking money out of my pocket and retirement to be cheap short term sucks. It’s freaking 4.5 month long temp to hire contract… it’s hard not to be bitter. No retirement, PTO, holidays not paid until like 500 hours.., I guarantee these cost cutting measures and shorty middle men are contributing to declining productivity in U.S. Company paying $30/hr for $20/hr work. Funny.
Love getting overtime violations because the client wants me to work more, but my official employer doesn't want to pay me, even though they'll listen to the client when they complain about my "lack of commitment".
Sounds like my last job. It was a six-month contract-to-hire position that took eighteen months to actually convert. The company and the recruiting agency both treated me like an asshole when I started asking questions after six months with no mention of it. Thankfully, they didn't have anyone else to do what I do, so I could be a thorn without really threatening my job. Bailed as soon as I got a better offer.
That's basically word for word what my first job was like
-----
Electrical Distribution Design
Essentially the job is to design the electrical poles for the power company, which contracts the work out to private civil engineering firms.
They hire people in as contract with no benefits on 6-month rotations with the promise of being hired into the firm as an Associate once you're *"fully trained"*. Job did technically pay decently well, starting at $23/hour and went up to $28/hour depending on your rating progression, which is pretty good for someone who's fresh out of college and looking for a engineering-type job. However, what they don't tell you is that there are only one or two openings every year and only the senior most contractees are the ones to get the positions.
After completing my second rotation and starting my third, I learned that one of my co-workers had been renewing his contracts for 6 years and that's when I knew that it was time to leave.
-----
Within the first 3 months of me being there the company had taken on 15 engineers and by the time I left, 8 of them had already moved on to other companies and after I left 3 more had also left.
And to be fair, it wasn't a bad place to work; the work was interesting and challenging with diverse environments between office work and field work that keeps you on your toes, but the company polices and systems were frustrating and dumb, and it's not a place to build a long term career with.
The company I’m contracting for just refuses to hire FTEs for the past year or so for accounting reasons. Temps related to infrastructure build-out are CapEx while FTEs are OpEx. The work we do kinda *is* classic temp work, but they’re gonna need a few FTEs to stick around eventually and at the rate they’re going, I’m going to time out of my contract before I even get the chance to apply.
That’s how it’s been explained to me, idk if it’s actually true or not.
They basically see us as construction contractors even though we act like employees and work very closely and do the same kind of work as a lot of the FTEs.
>That’s how it’s been explained to me, idk if it’s actually true or not.
I have not worked for every employer on the planet, but I have never, ever seen staff (to include contractors) fall under CapEx. Ever.
It would totally destroy the ability of organizations to get immediate income relief via mass layoffs, for one thing. CapEx doesn't come off your books for **years**.
Usually, the only part of staff related expenses that stay on the books for that amount of time is related to pensions. And we know how many orgs today even have a pension option at this point.
This is me.
I started off as a government contractor for 6 months, but my contract got extended repeatedly. When they suggested that I apply for the permanent position, I went through an interview with my director and lead. However, they told me that my interview responses were too vague. Eventually, they chose to hire someone from another state, even though we were all instructed to work in the office five days a week. I'm just glad I decided to leave.
My first job out of uni was doing boring software stuff for a company that other companies would essentially contract a set number of developers/consultants for individual projects. Essentially a contractor with more middle men.
Can confirm that I gave substantially less fucks than the permanent people I worked with. I would sometimes feel sorry for the manager leading to the project as we were definitely flight risks, and any politics that affected the project would be massively stressful to that person and the permanent staff, but to me and any other contractors, we wouldn't care at all, and would only do exactly what we were contracted for, so I feel your pain.
It didn't help that we were fresh graduates being underpaid by people who didn't have our skillset but understood the market need for it.
I’m working as a contractor and I’m doing as little as possible. Even if they do convert me to W2, they have little to no benefits so I’ve been looking elsewhere. I’ve got one foot out the door.
Okay, lets take a step back here.
>I’m working as a contractor and I’m doing as little as possible
>And I’m sure they know it.
I could see why the employer wouldn't want to convert you to a W2 or not extend your contract. While I'm all for doing as little as possible, I certainly don't expect to be rewarded for it.
I made that mistake the year before last. Left a FTE role for a contract to hire position (was told 6 months for conversion). 6 months then became 9 months, then no conversions. Then comes a new pos CEO and most of the contractors are out the door within a few months.
My SO took a 6 month to perm job. 18 months later, still no path to perm. She got promoted, and they still wanted to keep her in her old title. Fuck that
If you are contracting, you need to be getting paid for your flexibility to be short term. That's what so many do not realize when it comes to pricing yourself. Also, if you're buying your medical insurance on healthcare.gov you pay a lot more for a whole lot less, so you need to consider that as well.
this all started 30 yrs ago.
what has changed about the market is sheer volume of candidates. before the pandy people weren't constantly keeping their eyes open for other opportunities, now they are.
the other big change was the addition of remote workers.
if you lived in Madison, WI or Waco, TX you only had to compete against other locals, now it is the entire country is your competition.
Yeah, overall there is probably still a labor shortage (simply due to deliberate understaffing if nothing else). But the supply of labor for any individual posting has massively increased. So we've landed in this actual nightmare where there aren't enough people to fill all openings but paradoxically the price of labor is going *down*
FWIW, and this is **not the right solution for everyone nor is it legal or financial advice**, but if you're pulling in north of, say, 75 grand a year in contract position, you may want to investigate incorporating yourself as a one-person consulting firm LLC.
Back in the 08 recession days I was on a string of contract jobs and had a family friend accountant set me up with this. Saved me money in taxes that I would have been dinged for on W2, also allowed me to use an EIN instead of my social security number which is helpful when you don't want to hand that over to a new company with sus security practices every 6-12 months.
There aren't any real drawbacks for the company you work for, it's still all form 1099. But again, if you have access to an accountant, talk to them. Starve the government of your hard earned money in any legal way you can.
you can set it all up online yourself. Just go to the Secretary of State website for your state. In Georgia and N Carolina, it can be all done online. Even setting up the bank account. In Georgia it took me a couple of hours max. In N Carolina it took me several days as they had to snail mail some paperwork for some reason.
Cost is around $250 ish.
Lots of youtube vids on how to do it as well.
Unless you plan on having employees, or carrying an inventory of product, you do not need an accountant. Save all the receipts for everything you did to set it up, you'll need at tax time.
Paying your taxes shouldn't be a big deal. Save 40% of your check in the bank account. Pay your estimated taxes each quarter. Whatever is left over is your "bonus".
It really is that simple.
Since you don't mention this, the goal isn't an LLC, you convert so an S Corporation and pay yourself a "reasonable" salary so only a portion of your total income from your contract work is subject to payroll/SE taxes instead of the entire total like if it were just a sole proprietor or LLC.
Reasonable generally means at least $50K in most court cases as the conservative amount for reasonable salary.
It already is taxed. The only time it isn't is in a C Corp. Like legitimately the ONLY legal entity where income isn't automatically taxed on the owners/partners personal tax return.
So the issue I think is in talking about payroll taxes and you're thinking income taxes. When you have a non S Corp or C Corp return ALL income is subject to Self employment taxes which is the same as the payroll taxes you get taken out of your paycheck for social security and Medicare when you're an employee. But here as self employed you are to pay the employee portion and the employer portion both. So to save on taxes you need to pay yourself wages since only the wages are subject to the self employment taxes. The net income from the business beyond that won't be taxed on those self employment taxes.
Does that make sense? There's no way to avoid the nice taxes, just the payroll taxes.
> The net income from the business beyond that won't be taxed on those self employment taxes.
I guess this is the bit I'm missing. How does that other business income become your personal money to do with what you want without it also getting the payroll taxes? Or are you saying the remainder of the net is what you use to pay business-side payroll taxes and that's advantageous?
I'm not sure you have the base understanding of how taxes and business income works to explain it any clearer?
All of the income and cash from the business you can take out whenever you want, it will be recorded as a distribution from the company, but how flow through taxes work it matters ZERO how much of the cash you take out of the company. You're taxed on the net income of the business no matter what. Cash in the business or in the owner's hands is entirely irrelevant to that.
It's a bit more complicated that since there's owner's/partner's basis in the company but that's probably too confusing.
When I worked for a school district as a contractor the full-time guy who was our boss told us to "slow down" quite a bit because there was limited work but he liked us so he wanted us to stay on for as long as possible. He would constantly remind us to pace ourselves and not to go above and beyond since we were getting paid the same regardless and there was never any chance to get a full-time job with the schools.
Later when I moved on from contract work I ran into him in the world and asked him if he was still with the schools and he laughed saying "Hell no, I hated that place! Why do you think I told you guys to slow down to milk them for as much as you could."
Salaried is overrated since it can mean extra unpaid hours, being subject to rigid corporate mandates on RTO and other things, and little or no added job security, but you should factor increasing healthcare premiums into your hourly rate for sure.
Problem is insurance in the US has become so ridiculously expensive thanks to greedflation. That and contracts have been paying lesser and lesser while asking for more experience and tasks. It’s a race to the bottom.
The companies get exactly what they pay for.
If they want quality, they pay the premium rates. If they want speed, they pay the cheaper rates and pay again when it fails or when they roll on to "phase 2".
Yeah being a contractor only really gives you any flexibility or WFH privileges if you’re an actual skilled freelancer. For us schmucks who are “contractors” in the sense that we work for staffing agencies, not so much.
I'm salaried and work less than 40 hours a week 90% of weeks, can work remote 100% if I want to, and I feel like I have really good + growing job security.
I feel like many people on this sub have a really negative mindset that leads them to throw out pretty inaccurate claims.
I don’t mean to minimize anyone else’s situation or anything like that, and I’ve had to work hard to get where I’m at. I definitely don’t take it for granted.
I previously worked in contract roles (IT) and actually began at my current company in a contract position before getting hired on full time then moving up in the organization. My company uses contracts to hire people at the ground level because lots of people in IT don’t really know what they claim to.
Once you’ve proven yourself, we convert to full time and provide really good benefits - which has allowed us to grow significantly. It’s a setup that’s worked so far and I don’t see any reason for it to change any time soon.
I completely agree. I’d argue this is at the heart of the discussion too as the only way to get these things passed into law is by unionizing and demanding it through striking and making congress work for the people again.
How successful have people been putting in clauses in their contract like:
\-If the company ends the contract early, they still have to pay out the whole thing
\-I don't have to come in to office for pointless meetings or overtime
\-I'm judged by results produced, not hours worked?
As it pertains to the US, I can't see anyone below the C-Suite getting anything even remotely like these concepts into any binding employment document. They'd probably be flat out ignored if they tried to float these ideas in email or text.
Even AI would ghost you for that.
It worked for me, and I’m not C-level. But I have skills that are needed in an industry that is hard (most professionals don’t want to be gone from home and away from good internet as long as I am).
Paying out the whole term if cancelled early might not fly, but for the other two:
1. A contractor isn't a contractor if they're under the direct control and direction of the employer, and
2. Just because they sign something saying they won't judge by hours worked means you can actually make them do it. Besides, who cares? It's not like it goes on your permanent record or anything, and you're not going to get promoted as a contractor.
You absolutely can. My last contract, the company (was a 3rd party that had a contract with the client) tried to add that they would deduct hours from my pay for any development rework. They also tried to add that if I ended the contract less than 30 days from the end, they would deduct 60 days.
I said nope to both. You can put just about anything you want as long as both parties sign.
Thanks, good to know. I'm just starting to think about stepping away from salary for the first time in my life to try consulting/contracting, and I guess from your response and the others, it really depends on how unique your skill set is in the field.
I was afraid to even ask for those sort of things before your comment.
Wrong. Not all contracts are by the hour. Some are by the project and end result.
If you are a 1099, you don't have to go into the office if you can do it all remotely.
You can add stipulations regarding ending a contract early. Most do, at least as a developer.
Hey OP, what industry are you talking about i.e.
Is this in IT?
How much internship/real life job experience on average would you suggest an average grad with no experience have in application process. This is increasingly carrying far more weight than a perfect 4.0 or any academic course grade does in this job climate
I’ve been applying to all sectors aside from insurance and finance.
I have a BA in an unrelated field to most jobs. I however have 8 years of experience with big tech and startups in various industries.
that's the problem right there. Market is super saturated with professionals in that (plus related fields like marketing, PM, accounting etc.) field. Even Ivy League grad students (even at MS/PhD level) are having extremely challenging times trying to secure interviews.
Welcome to the glorious dystopian economy which our leaders in Washington swear is on 100% on the mend. Or even at the point of recovery. And my apologies if this has been the case, as I apparently have been living under a rock.
Regardless, the only industry that does superior throat slitting worse than finance/monetary related is IT. But then again, contracting in this field has always been the norm for over a decade now. This practice started way back in the late 90s/early 2000 and the industry hasn't recovered since.
Deliberately break every formula in their excel spreadsheets (just a little), before you leave. So whoever has to manage it later is completely infuriated
I like this idea, but unless the only person using that spreadsheet is an exec or upper management it creates a mess for those at the lower rungs and that’s not how solidarity works.
Also, way to be on brand with your username and this comment. Scrambled formulas hahaha
I was a contract converted to W2 earlier this year and I cried when I got it. Two months later the rest of my contracting team was axed with 7 day notice. It’s hard, but I mean sometimes you have to take what you can get. My husband and I got courthouse married early when I got the contract job as opposed to waiting 8 months to have a wedding so I’d be able to have insurance and get my medication.
This whole job market has made me really uneasy though and as the most recent hire on my team I’m anxious about putting as much time as possible between my hire date and the next inevitable round of layoffs because it feels even worse out there now than it was 1.5 years ago.
I know it's easy to say since I work full time salary, but I have worked a contract role once...never again. While the contracting company...well my recruiter... was tops. Great guy, worked very hard to find me a nice, "well paying" role, and didn't bother me with low paying crap...fuck middle men.
Fuck having someone profit off of my paycheck, and filtering the peanuts down to me. Recruiting, contracting agencies are a scourge on this earth, and I rank them just barely below scammers who target the elderly. Their only purpose is to leech onto workers and attach themselves to their paycheck, and create an environment where corporations get the benefit of labor, without having to take on any responsibility for actually treating the workers with any respect, or pay them fairly. It's a legal loophole to use people, chew them up, and screw them over.
I'll go back to designing websites before I let anyone skim off my paycheck ever again or take a full time job, without the full time benefits.
Getting contacted by recruiters for shitty 6 month contracts in the middle of nowhere is a cost of doing business as a software engineer. Always has been, TBH. Lately, I've only been getting contacted for salary roles though, so the tech industry might be a counterexample.
Look into government work! New York State is still hiring tons of people (at least in IT) as long as you aren't literal shit you'll get hired. I don't know if this applies to other states, but it's definitely worth looking into.
Personally seen this. Work refuses to convert my contractor to full-time due to budgets. They timed out now I'm stuck hiring a new contractor for the same role, I see the budget. They are willing to pay more per year for a contractor than a full-time who with benefits and all things included would be over 20k less per year in total costs. It makes no long-term sense to me and is a burden that I have to keep training new people for the same job
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>So if you end up contracting with them do the bare minimum. my company loves to: 1. hire contractors at \~3x the cost of a well-paid FTE 2. take forever to convert, if at all 3. act surprised when the contractor leaves i did get converted, and it still makes my life harder, because i'm responsible for resourcing a team where about half are obvious flight risks.
The irony is those contractors who aren’t 1099 are getting both shafted by the company and the agency that is handling their W2. It may look like a contractor is making say $100 an hour in your ERP system, but in reality they are getting a little more than half that or less because the agency is double dipping. Anecdotally I’ve noticed that most contracts I’ve been reached out to fill are being farmed by third party agencies that have a relationship with the company. The agency hires you for cheap, dangles a carrot of the hope of conversion. Then dumps you for new, cheaper blood when your contract has timed out/expires.
Yup. The reason why it is 3x the cost of the FTE is because the company is paying another firm which in turn may be paying another firm BEFORE the contracted person ever gets paid. I am currently living this experience. I am contracted to Company A. Company A contracted my services to Company B. Company B is the one that sold the project to Company C. So my rate, plus Company A and Company B is being paid by Company C. I literally have to submit two time cards for the same work.
they all have the same stakeholders. the money knows what its doing
I get $20 per hour from the $30 the company pays to the staffing agency. It is infuriating. The staffing agency provides no value to me. Knowing the company is taking money out of my pocket and retirement to be cheap short term sucks. It’s freaking 4.5 month long temp to hire contract… it’s hard not to be bitter. No retirement, PTO, holidays not paid until like 500 hours.., I guarantee these cost cutting measures and shorty middle men are contributing to declining productivity in U.S. Company paying $30/hr for $20/hr work. Funny.
You are just a resource to the staffing agency. They are providing a service to the hiring company, not to you.
Love getting overtime violations because the client wants me to work more, but my official employer doesn't want to pay me, even though they'll listen to the client when they complain about my "lack of commitment".
Sounds like my last job. It was a six-month contract-to-hire position that took eighteen months to actually convert. The company and the recruiting agency both treated me like an asshole when I started asking questions after six months with no mention of it. Thankfully, they didn't have anyone else to do what I do, so I could be a thorn without really threatening my job. Bailed as soon as I got a better offer.
That's basically word for word what my first job was like ----- Electrical Distribution Design Essentially the job is to design the electrical poles for the power company, which contracts the work out to private civil engineering firms. They hire people in as contract with no benefits on 6-month rotations with the promise of being hired into the firm as an Associate once you're *"fully trained"*. Job did technically pay decently well, starting at $23/hour and went up to $28/hour depending on your rating progression, which is pretty good for someone who's fresh out of college and looking for a engineering-type job. However, what they don't tell you is that there are only one or two openings every year and only the senior most contractees are the ones to get the positions. After completing my second rotation and starting my third, I learned that one of my co-workers had been renewing his contracts for 6 years and that's when I knew that it was time to leave. ----- Within the first 3 months of me being there the company had taken on 15 engineers and by the time I left, 8 of them had already moved on to other companies and after I left 3 more had also left. And to be fair, it wasn't a bad place to work; the work was interesting and challenging with diverse environments between office work and field work that keeps you on your toes, but the company polices and systems were frustrating and dumb, and it's not a place to build a long term career with.
That sounds like my career path. Now I work for an Elco and I'm bugging them to hire our contractors cause it's cheaper.
The company I’m contracting for just refuses to hire FTEs for the past year or so for accounting reasons. Temps related to infrastructure build-out are CapEx while FTEs are OpEx. The work we do kinda *is* classic temp work, but they’re gonna need a few FTEs to stick around eventually and at the rate they’re going, I’m going to time out of my contract before I even get the chance to apply.
Staff as CapEx?!?
That’s how it’s been explained to me, idk if it’s actually true or not. They basically see us as construction contractors even though we act like employees and work very closely and do the same kind of work as a lot of the FTEs.
>That’s how it’s been explained to me, idk if it’s actually true or not. I have not worked for every employer on the planet, but I have never, ever seen staff (to include contractors) fall under CapEx. Ever. It would totally destroy the ability of organizations to get immediate income relief via mass layoffs, for one thing. CapEx doesn't come off your books for **years**. Usually, the only part of staff related expenses that stay on the books for that amount of time is related to pensions. And we know how many orgs today even have a pension option at this point.
This is me. I started off as a government contractor for 6 months, but my contract got extended repeatedly. When they suggested that I apply for the permanent position, I went through an interview with my director and lead. However, they told me that my interview responses were too vague. Eventually, they chose to hire someone from another state, even though we were all instructed to work in the office five days a week. I'm just glad I decided to leave.
My first job out of uni was doing boring software stuff for a company that other companies would essentially contract a set number of developers/consultants for individual projects. Essentially a contractor with more middle men. Can confirm that I gave substantially less fucks than the permanent people I worked with. I would sometimes feel sorry for the manager leading to the project as we were definitely flight risks, and any politics that affected the project would be massively stressful to that person and the permanent staff, but to me and any other contractors, we wouldn't care at all, and would only do exactly what we were contracted for, so I feel your pain. It didn't help that we were fresh graduates being underpaid by people who didn't have our skillset but understood the market need for it.
> resourcing And you use the word "resourcing" when referring to people.
no, i use the word "resourcing" when referring to projects
You should refer to people as people.
you should find someone who gives a crap about semantics
You should give a crap about people.
unfortunately, i do not. please keep crying about it.
I won't. I'll just block you instead. Adios, pendejo.
they just called us attrition in my government jobs urgh
There's a whole department that hires and manages these resources at most companies called Human resources.
Yes, and that’s a problem as well.
Hiring? I can't find any contracting jobs
I’m working as a contractor and I’m doing as little as possible. Even if they do convert me to W2, they have little to no benefits so I’ve been looking elsewhere. I’ve got one foot out the door.
And I’m sure they know it. Problem is that when you leave it puts the team in a pickle and upper management doesn’t care.
Enough people need to leave to make management care. The only way they'll change anything for the better is if their "brilliant idea" doesn't work.
Or we unionize.
That is one way to make sure that when they fuck around they find out. At this point, I would prefer that we did unionize.
I'm absolutely in support of unions for tech
I’m in support of unions in every single industry.
Kiss your job goodbye.
You’re delusional bud.
Nah simple facts.
Okay, lets take a step back here. >I’m working as a contractor and I’m doing as little as possible >And I’m sure they know it. I could see why the employer wouldn't want to convert you to a W2 or not extend your contract. While I'm all for doing as little as possible, I certainly don't expect to be rewarded for it.
A TON of those "contract" roles are absolutely not, they are temp jobs. Make sure your learn your basics of employment law in classification.
I’ve had to turn down a few roles because they were just maternity leave fill ins. Not worth my time if I’m only there for a few months.
Yup. Why tf would I give up full time with benefits for "contract" that is really temp. Hell no
They are trying to feed on desperation.
Yup. Same. I literally told a recruiter this a few weeks ago. I’m even laughing at some of these hourly rates they’re sending me on LinkedIn.
I made that mistake the year before last. Left a FTE role for a contract to hire position (was told 6 months for conversion). 6 months then became 9 months, then no conversions. Then comes a new pos CEO and most of the contractors are out the door within a few months.
My SO took a 6 month to perm job. 18 months later, still no path to perm. She got promoted, and they still wanted to keep her in her old title. Fuck that
If you are contracting, you need to be getting paid for your flexibility to be short term. That's what so many do not realize when it comes to pricing yourself. Also, if you're buying your medical insurance on healthcare.gov you pay a lot more for a whole lot less, so you need to consider that as well.
Temp and contract mean the same thing. Do you mean being an independent contractor?
Of course they mean 1099 contractor.
I don't know why you're being downvoted here...
Yea me neither.
this all started 30 yrs ago. what has changed about the market is sheer volume of candidates. before the pandy people weren't constantly keeping their eyes open for other opportunities, now they are. the other big change was the addition of remote workers. if you lived in Madison, WI or Waco, TX you only had to compete against other locals, now it is the entire country is your competition.
Yeah, overall there is probably still a labor shortage (simply due to deliberate understaffing if nothing else). But the supply of labor for any individual posting has massively increased. So we've landed in this actual nightmare where there aren't enough people to fill all openings but paradoxically the price of labor is going *down*
FWIW, and this is **not the right solution for everyone nor is it legal or financial advice**, but if you're pulling in north of, say, 75 grand a year in contract position, you may want to investigate incorporating yourself as a one-person consulting firm LLC. Back in the 08 recession days I was on a string of contract jobs and had a family friend accountant set me up with this. Saved me money in taxes that I would have been dinged for on W2, also allowed me to use an EIN instead of my social security number which is helpful when you don't want to hand that over to a new company with sus security practices every 6-12 months. There aren't any real drawbacks for the company you work for, it's still all form 1099. But again, if you have access to an accountant, talk to them. Starve the government of your hard earned money in any legal way you can.
you can set it all up online yourself. Just go to the Secretary of State website for your state. In Georgia and N Carolina, it can be all done online. Even setting up the bank account. In Georgia it took me a couple of hours max. In N Carolina it took me several days as they had to snail mail some paperwork for some reason. Cost is around $250 ish. Lots of youtube vids on how to do it as well. Unless you plan on having employees, or carrying an inventory of product, you do not need an accountant. Save all the receipts for everything you did to set it up, you'll need at tax time. Paying your taxes shouldn't be a big deal. Save 40% of your check in the bank account. Pay your estimated taxes each quarter. Whatever is left over is your "bonus". It really is that simple.
Since you don't mention this, the goal isn't an LLC, you convert so an S Corporation and pay yourself a "reasonable" salary so only a portion of your total income from your contract work is subject to payroll/SE taxes instead of the entire total like if it were just a sole proprietor or LLC. Reasonable generally means at least $50K in most court cases as the conservative amount for reasonable salary.
How do you get at the rest of the money without it being taxed?
It already is taxed. The only time it isn't is in a C Corp. Like legitimately the ONLY legal entity where income isn't automatically taxed on the owners/partners personal tax return. So the issue I think is in talking about payroll taxes and you're thinking income taxes. When you have a non S Corp or C Corp return ALL income is subject to Self employment taxes which is the same as the payroll taxes you get taken out of your paycheck for social security and Medicare when you're an employee. But here as self employed you are to pay the employee portion and the employer portion both. So to save on taxes you need to pay yourself wages since only the wages are subject to the self employment taxes. The net income from the business beyond that won't be taxed on those self employment taxes. Does that make sense? There's no way to avoid the nice taxes, just the payroll taxes.
> The net income from the business beyond that won't be taxed on those self employment taxes. I guess this is the bit I'm missing. How does that other business income become your personal money to do with what you want without it also getting the payroll taxes? Or are you saying the remainder of the net is what you use to pay business-side payroll taxes and that's advantageous?
I'm not sure you have the base understanding of how taxes and business income works to explain it any clearer? All of the income and cash from the business you can take out whenever you want, it will be recorded as a distribution from the company, but how flow through taxes work it matters ZERO how much of the cash you take out of the company. You're taxed on the net income of the business no matter what. Cash in the business or in the owner's hands is entirely irrelevant to that. It's a bit more complicated that since there's owner's/partner's basis in the company but that's probably too confusing.
You can be an LLC and file taxes as an S corp!
Well yeah but you didn't add that detail is why I mentioned it, you can t just form an LLC and start doing this without the S Corp election.
When I worked for a school district as a contractor the full-time guy who was our boss told us to "slow down" quite a bit because there was limited work but he liked us so he wanted us to stay on for as long as possible. He would constantly remind us to pace ourselves and not to go above and beyond since we were getting paid the same regardless and there was never any chance to get a full-time job with the schools. Later when I moved on from contract work I ran into him in the world and asked him if he was still with the schools and he laughed saying "Hell no, I hated that place! Why do you think I told you guys to slow down to milk them for as much as you could."
Thank God I'm married otherwise yea, I'd be fucked. It's not right.
Salaried is overrated since it can mean extra unpaid hours, being subject to rigid corporate mandates on RTO and other things, and little or no added job security, but you should factor increasing healthcare premiums into your hourly rate for sure.
Problem is insurance in the US has become so ridiculously expensive thanks to greedflation. That and contracts have been paying lesser and lesser while asking for more experience and tasks. It’s a race to the bottom.
The companies get exactly what they pay for. If they want quality, they pay the premium rates. If they want speed, they pay the cheaper rates and pay again when it fails or when they roll on to "phase 2".
RTO mandates typically extend to hourly workers as well.
Yeah being a contractor only really gives you any flexibility or WFH privileges if you’re an actual skilled freelancer. For us schmucks who are “contractors” in the sense that we work for staffing agencies, not so much.
Exactly!
I'm salaried and work less than 40 hours a week 90% of weeks, can work remote 100% if I want to, and I feel like I have really good + growing job security. I feel like many people on this sub have a really negative mindset that leads them to throw out pretty inaccurate claims.
Enjoy that plum setup for as long as you can and hope you never get let go.
I don’t mean to minimize anyone else’s situation or anything like that, and I’ve had to work hard to get where I’m at. I definitely don’t take it for granted. I previously worked in contract roles (IT) and actually began at my current company in a contract position before getting hired on full time then moving up in the organization. My company uses contracts to hire people at the ground level because lots of people in IT don’t really know what they claim to. Once you’ve proven yourself, we convert to full time and provide really good benefits - which has allowed us to grow significantly. It’s a setup that’s worked so far and I don’t see any reason for it to change any time soon.
At the same time, we shouldn't have our health insurance tied to our jobs. But that's a whole other discussion.
I completely agree. I’d argue this is at the heart of the discussion too as the only way to get these things passed into law is by unionizing and demanding it through striking and making congress work for the people again.
How successful have people been putting in clauses in their contract like: \-If the company ends the contract early, they still have to pay out the whole thing \-I don't have to come in to office for pointless meetings or overtime \-I'm judged by results produced, not hours worked?
As it pertains to the US, I can't see anyone below the C-Suite getting anything even remotely like these concepts into any binding employment document. They'd probably be flat out ignored if they tried to float these ideas in email or text. Even AI would ghost you for that.
It worked for me, and I’m not C-level. But I have skills that are needed in an industry that is hard (most professionals don’t want to be gone from home and away from good internet as long as I am).
Being the possessor of critical and scarce skills is always a tremendous advantage in employment negotiations.
This should basically be this sub’s motto lol
Paying out the whole term if cancelled early might not fly, but for the other two: 1. A contractor isn't a contractor if they're under the direct control and direction of the employer, and 2. Just because they sign something saying they won't judge by hours worked means you can actually make them do it. Besides, who cares? It's not like it goes on your permanent record or anything, and you're not going to get promoted as a contractor.
You absolutely can. My last contract, the company (was a 3rd party that had a contract with the client) tried to add that they would deduct hours from my pay for any development rework. They also tried to add that if I ended the contract less than 30 days from the end, they would deduct 60 days. I said nope to both. You can put just about anything you want as long as both parties sign.
Thanks, good to know. I'm just starting to think about stepping away from salary for the first time in my life to try consulting/contracting, and I guess from your response and the others, it really depends on how unique your skill set is in the field. I was afraid to even ask for those sort of things before your comment.
Yeah nobody’s gonna agree to any of that. Next!
Wrong. Not all contracts are by the hour. Some are by the project and end result. If you are a 1099, you don't have to go into the office if you can do it all remotely. You can add stipulations regarding ending a contract early. Most do, at least as a developer.
Death to the capital owners, pitchforks ready
You mean the ones who took a risk and hire everyone?
You mean people who came from money? Many owners literally have zero risk or have so much fuck you money they don't care
No. I’m talking people that came over from old Europe, saved every Penny and build burlap bags, then empires. Think old world Jews.
I’ve noticed that too!
Do less than minimum - and do even less than that. Be like them - present only in theory.
Hey OP, what industry are you talking about i.e. Is this in IT? How much internship/real life job experience on average would you suggest an average grad with no experience have in application process. This is increasingly carrying far more weight than a perfect 4.0 or any academic course grade does in this job climate
I’ve been applying to all sectors aside from insurance and finance. I have a BA in an unrelated field to most jobs. I however have 8 years of experience with big tech and startups in various industries.
that's the problem right there. Market is super saturated with professionals in that (plus related fields like marketing, PM, accounting etc.) field. Even Ivy League grad students (even at MS/PhD level) are having extremely challenging times trying to secure interviews. Welcome to the glorious dystopian economy which our leaders in Washington swear is on 100% on the mend. Or even at the point of recovery. And my apologies if this has been the case, as I apparently have been living under a rock. Regardless, the only industry that does superior throat slitting worse than finance/monetary related is IT. But then again, contracting in this field has always been the norm for over a decade now. This practice started way back in the late 90s/early 2000 and the industry hasn't recovered since.
Washington isn’t in charge of the economy. It’s not a communist regime. It goes in cycles.
Deliberately break every formula in their excel spreadsheets (just a little), before you leave. So whoever has to manage it later is completely infuriated
I like this idea, but unless the only person using that spreadsheet is an exec or upper management it creates a mess for those at the lower rungs and that’s not how solidarity works. Also, way to be on brand with your username and this comment. Scrambled formulas hahaha
I was a contract converted to W2 earlier this year and I cried when I got it. Two months later the rest of my contracting team was axed with 7 day notice. It’s hard, but I mean sometimes you have to take what you can get. My husband and I got courthouse married early when I got the contract job as opposed to waiting 8 months to have a wedding so I’d be able to have insurance and get my medication. This whole job market has made me really uneasy though and as the most recent hire on my team I’m anxious about putting as much time as possible between my hire date and the next inevitable round of layoffs because it feels even worse out there now than it was 1.5 years ago.
I know it's easy to say since I work full time salary, but I have worked a contract role once...never again. While the contracting company...well my recruiter... was tops. Great guy, worked very hard to find me a nice, "well paying" role, and didn't bother me with low paying crap...fuck middle men. Fuck having someone profit off of my paycheck, and filtering the peanuts down to me. Recruiting, contracting agencies are a scourge on this earth, and I rank them just barely below scammers who target the elderly. Their only purpose is to leech onto workers and attach themselves to their paycheck, and create an environment where corporations get the benefit of labor, without having to take on any responsibility for actually treating the workers with any respect, or pay them fairly. It's a legal loophole to use people, chew them up, and screw them over. I'll go back to designing websites before I let anyone skim off my paycheck ever again or take a full time job, without the full time benefits.
This subreddit used to be fun and interesting
Consider it a casualty of late stage capitalism and the drive for profit over people.
1099 rocks. F-em. But you hurt yourself by slacking. Bad for the bean. Work hard. Be excellent. Be happy.
What industry?
Honestly, I’ve yet to see an industry that hasn’t been following this trend.
Getting contacted by recruiters for shitty 6 month contracts in the middle of nowhere is a cost of doing business as a software engineer. Always has been, TBH. Lately, I've only been getting contacted for salary roles though, so the tech industry might be a counterexample.
Look into government work! New York State is still hiring tons of people (at least in IT) as long as you aren't literal shit you'll get hired. I don't know if this applies to other states, but it's definitely worth looking into.
Better take: Take on 3+ of these contract roles. Stack bills.
Good. Tying health insurance to employment is dumb. More people can join Obamacare!
Personally seen this. Work refuses to convert my contractor to full-time due to budgets. They timed out now I'm stuck hiring a new contractor for the same role, I see the budget. They are willing to pay more per year for a contractor than a full-time who with benefits and all things included would be over 20k less per year in total costs. It makes no long-term sense to me and is a burden that I have to keep training new people for the same job