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Author: decath Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 81560  
Subject: Re: no retirement plan via employer Date: 1/12/2005 1:44 PM
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It really hurts going from a job with benefits to independent contractor. Most of the time, you lose out BIG TIME financially. If you are working with only one customer and it is at their job site, then they may be hiring you as a contractor illegally and you may be able to get the IRS to insist that you be classed as an employee.

In the "IT" industry, I would not say you lose big most of the time. Perhaps some of the time is more accurate. The flex hours you can get, working from home and the dead time between projects can be a welcome sabatical if you plan appropriately. When I did "full-time" contracting, I charged an hourly rate that more than made up the loss of employee benefits. Plus I had flexible hours and I had additional business deductions that in some years more than made up the extra 7.65% employee tax. I also took advantage of the SEP IRA's that allowed me to stick more into retirements that the 401ks did at the time.

But the best thing about SE is you are you own boss and you can pick jobs you want and schedule them when you want. You can work a string of 60 hour weeks for a few months and then take a month off and vacation.

PK's comment about working at only one company as a contractor IS a violation of IRS rules after a certain amount of time. I don't have the exact rules handy since I'm an employee now, but the contractors that I know work very hard to do work for at least 2 companies in any given year so they stay off the IRS' radar screen for a tax audit.

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