I see there are already replies with the real answer ("it's darn complicated") but I thought that since I'm a W2 contractor in the same business that has also had a little 1099 income I thought I'd comment as well with a couple of specifics -- please note that this is hardly complete, but I thought I'd add some real-world data. And I suspect that most of it isn't really news to you, but what the heck.1. The single biggest advantage is that you won't have the overhead of the agency. Any tax issues pale in comparison.Here's some real world examples I know of.What the company pays->What you get$95->$65$75->$55$35->$20So there's lots of room to bump your rate up and still undercut the agencies.2. As you note, the agency provides a service. You'll have to get your own work. You'll have to do your own billing. You'll have to come up with a contract. You'll be paid 30 days after you bill. There's a chance they'll stall or won't pay you at all. My agency also provides 401(k), direct deposit, and group medical rates. If you have that, it's gone.3. Tax drawbacks: You pick up their half of the social security tax (Around 4.5K/year I believe). You have to file schedule C which is a big pain, and it's taxed differently.4. Tax advantages: You can start an IRA-SEP, which will let you put away more money tax deferred than a 401(k) will. In theory it's much easier to deduct computers and so forth, but we're talking maybe a couple of thousand dollars of hardware a year. If you're making $150K/year, is that really going to matter very much?5. Loans. Since you're technically an employee, you can get, say, a house loan putting them as your employer. As an independent contractor you'll have to get a loan as self-employed, which seems to be much more difficult.Hope that helps,Doug
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