Full time vs contracting

[perugu_vada]

10 hours ago, Sanjiv said:

if your skills are mediocre and there is not much difference between your contracting rate or FT salary, go for FT.

If you are a hardcore developer demanding top dollar, FT offer will always be like 40-50% pay cut compared to contracting rate. Just stick to contracting. And if you have an S-Corp, you can contribute 25% of your salary as Employer's share (100% employer and 0% from you) towards SEP-IRA which is free money! There are many other ways you can write-off business expenses on a corp that you cannot deduct as a W2 individual employee. Travel, maintenance, repairs, postage, office supplies, utilities, internet, phone, advertising, legal expenses, education, insurance premiums, home office rent and the list goes on... If your corp makes 175K for instance, you can pay yourself 100K as salary (plus 25K tax-free as SEP-IRA) as the FT employee of your company and the rest is profit to you.

There is no job guarantee in FT if you lack skills.

Payroll run chesi w2 generate chestara ante ? 

[Sanjiv]

51 minutes ago, Vaampire said:

Ft offer will be 40-50% pay cut compared to contracting. Cool. In bay area pretty much most of them will make 200k tc as fte. So contractors make 350-400k?

Not everyone works in Bay Area bro. I'm doing this for over a decade. I get a FT offer within a couple of months of joining any client and I decline it politely stating the losses I would incur if I go FT individual (rate/salary difference, 25% SEP, expense write-offs, IRS would ask me to shut down my company if it is not making any revenue saying it is a hobby, etc)

[Sanjiv]

12 minutes ago, perugu_vada said:

Payroll run chesi w2 generate chestara ante ? 

Yes, you use a payroll processing company for your company like WagePoint.com which is very cheap, $20 flat rate plus $2 per employee per month. They do all the monthly, quarterly and yearly filings. I was using Wells Fargo, their lowest plan was $57 a month for upto 3 employees and was wasting money as I'm just one employee. Your CPA should be able to guide you through S-Corp deductions, filings, etc.

[Vaampire]

35 minutes ago, anna_gari_maata said:

Full time 50% less pay than contracting

But full time 150% more peace of mind than contracting

 

If you live for money, do contracting

If you live for something better like an ambition stay in full time. For eg. FAANG throws resume in dustbin if applicant is contractor

 

 

Full time pays less than contracting. This applies only in initial phase of career. After 10 yrs exp, ur billing rate as contractor may be 20% more than what u got in first year. But with fte’s ur salary should multifold by then

[perugu_vada]

1 minute ago, Sanjiv said:

Yes, you use a payroll processing company for your company like WagePoint.com which is very cheap, $20 flat rate plus $2 per employee per month. They do all the monthly, quarterly and yearly filings. I was using Wells Fargo, their lowest plan was $57 a month for upto 3 employees and was wasting money as I'm just one employee. Your CPA should be able to guide you through S-Corp deductions, filings, etc.

Husband wife idharu fte lo work chesthu .. inko contracting job money 1099 thru s-corp lo padithe apudu em cheyochu ah money ni ? Payroll run cheyakunda direct ga use cheskovocha ah money ni to pay towards mortgage or car payments etc ?

[Vaampire]

5 minutes ago, Sanjiv said:

Not everyone works in Bay Area bro. I'm doing this for over a decade. I get a FT offer within a couple of months of joining any client and I decline it politely stating the losses I would incur if I go FT individual (rate/salary difference, 25% SEP, expense write-offs, IRS would ask me to shut down my company if it is not making any revenue saying it is a hobby, etc)

Even in other states, candidates can get 150-200tc with 10yoe(not even counting 401k & 3-4weeks paid vacation). Is it easy to gey double with contracting.

i did work as contractor in my initial career and also for an year in between. I ended up paying $1000-1400 for just insurance every month. No pto’s and many other benefits. 
 

What will be the career growth as contractor? Mostly end up as an IC even after several years. Pay hikes kooda undav gaa. Agree pay hikes are peanuts in fte too in yearly perf reviews but u can get big bump when switching companies

[Sanjiv]

2 minutes ago, perugu_vada said:

Husband wife idharu fte lo work chesthu .. inko contracting job money 1099 thru s-corp lo padithe apudu em cheyochu ah money ni ? Payroll run cheyakunda direct ga use cheskovocha ah money ni to pay towards mortgage or car payments etc ?

Your company received the money from the client/vendor and your company can do anything with it like pay wages, rent, insurance, utilities, expenses, etc. If the car is on the company name, maybe yes. Home office rent yes. Otherwise, at some point, you have to pay taxes for paying wages and receiving the money. Better ask your CPA. Tax evasion is a serious crime.

[perugu_vada]

1 minute ago, Vaampire said:

Even in other states, candidates can get 150-200tc with 10yoe(not even counting 401k & 3-4weeks paid vacation). Is it easy to gey double with contracting.

i did work as contractor in my initial career and also for an year in between. I ended up paying $1000-1400 for just insurance every month. No pto’s and many other benefits. 
 

What will be the career growth as contractor? Mostly end up as an IC even after several years. Pay hikes kooda undav gaa. Agree pay hikes are peanuts in fte too in yearly perf reviews but u can get big bump when switching companies

Just can’t generalize fte better than contracting ani always .. 

my take is, 2-paycheques unte in one household, one shall be fte, so insurance benefits osthay ,. Other can be fte or contracting based on their priority .. important thing about contracting vs fte is, contracting lo jobs switch authu unte bayata technology world ela undi telustundi .. thereby job poina thechukunta anna dhairyam untundi .. with fte, over the years work lo chinna chithaka change unna .. e market lo ye news chusina bhayam estubdi .. mana job ki em autunda ani 

[perugu_vada]

1 minute ago, Sanjiv said:

Your company received the money from the client/vendor and your company can do anything with it like pay wages, rent, insurance, utilities, expenses, etc. If the car is on the company name, maybe yes. Home office rent yes. Otherwise, at some point, you have to pay taxes for paying wages and receiving the money. Better ask your CPA. Tax evasion is a serious crime.

Tax evade cheyali ani plan kadu le .. Asalu use cheyocha annadi question 

yeah cpa tho matladatha next yr .. Oka clarity ostundi about do’s and dont’s

[Vaampire]

1 minute ago, perugu_vada said:

Just can’t generalize fte better than contracting ani always .. 

my take is, 2-paycheques unte in one household, one shall be fte, so insurance benefits osthay ,. Other can be fte or contracting based on their priority .. important thing about contracting vs fte is, contracting lo jobs switch authu unte bayata technology world ela undi telustundi .. thereby job poina thechukunta anna dhairyam untundi .. with fte, over the years work lo chinna chithaka change unna .. e market lo ye news chusina bhayam estubdi .. mana job ki em autunda ani 

Yaa thats correct.

but u cannot stick to single technology in the current market. U just need to be open.

contacting or fte, we should keep switchinh jobs atleast once every 3 years anedhi naa opinion.

[Sanjiv]

34 minutes ago, Vaampire said:

Even in other states, candidates can get 150-200tc with 10yoe(not even counting 401k & 3-4weeks paid vacation). Is it easy to gey double with contracting.

i did work as contractor in my initial career and also for an year in between. I ended up paying $1000-1400 for just insurance every month. No pto’s and many other benefits. 
 

What will be the career growth as contractor? Mostly end up as an IC even after several years. Pay hikes kooda undav gaa. Agree pay hikes are peanuts in fte too in yearly perf reviews but u can get big bump when switching companies

There is a difference between 125K salary and $100 per hour. There are monetary benefits to gain from using an S-Corp entity (some of which can be roughly compared to FT benefits). Health Insurance is a big expense and I'm paying $800 a month with Blue Cross (written of as expense).

You work as a contractor for the client but you are a FT employee of your S-Corp. You can pay yourself as much salary as you want as the FT employee of your company. But why would you pay more salary? You pay yourself as less as permissible and pay less taxes on wages (usually 60% salary : 40% biz expenses from total company revenue) and draw the rest as tax-free profit after expenses.

[Vaampire]

3 minutes ago, Sanjiv said:

There is a difference between 125K salary and $100 per hour. There are monetary benefits to gain from using an S-Corp entity (some of which can be roughly compared to FT benefits). Health Insurance is a big expense and I'm paying $800 a month with Blue Cross (written of as expense).

You work as a contractor for the client but you are a FT employee of your S-Corp. You can pay yourself as much salary as you want as the FT employee of your company. But why would you pay more salary? You pay yourself as less as permissible and pay less taxes on wages (usually 60 salary : 40 biz expenses from total company revenue) and draw the rest as tax-free profit after expenses.

What about other fte benefits like bonus, 401k, stock refreshers, pto’s

[Sanjiv]

27 minutes ago, perugu_vada said:

Just can’t generalize fte better than contracting ani always .. 

my take is, 2-paycheques unte in one household, one shall be fte, so insurance benefits osthay ,. Other can be fte or contracting based on their priority .. important thing about contracting vs fte is, contracting lo jobs switch authu unte bayata technology world ela undi telustundi .. thereby job poina thechukunta anna dhairyam untundi .. with fte, over the years work lo chinna chithaka change unna .. e market lo ye news chusina bhayam estubdi .. mana job ki em autunda ani 

Correct! I've seen some FTEs working for the same company and on same tech for 20-25 years like dinosaurs and completely unaware of the latest tech. They have vertical/domain/company knowledge and they can work only for the same company or similar company using the same tech.

Contractors have horizontal knowledge and mostly current with latest developments in tech with transferable skills like salesmen. A salesman could be selling high-end software products today and selling vacuum cleaners tomorrow and the product doesn't matter to him.

[Sanjiv]

On 2/12/2023 at 10:03 AM, Vaampire said:

What about other fte benefits like bonus, 401k, stock refreshers, pto’s

How is the meagre 401K comparable to SEP-IRA at 25% Employer's share (100% from employer and 0% from you)?

How many companies offer stocks?

As an FTE of your own S-Corp, you can pay yourself bonus, go on PTO and you still get paid a fixed monthly salary (yearly/12) by your own company.

And all the deductions, expense write-offs you can do as an S-Corp? You cannot even deduct home-office rent for working from home as a W2.

In my opinion, FTE is like owning a house with a huge mortgage. Contracting is like renting an apartment for a small amount and investing the difference (and buying a house later with 100% cash down). That is my rough analogy.

[IamBhagatSingh]

Simple. 

Contracting = more money

Full time= peace of mind