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Tip #1: “Employment 101”
Being a permanent, salaried employee comes with various benefits, like health, dental, vision, insurance, retirement plans, and vacation pay. But there are downsides, too, like unpaid overtime, slower salary growth, and being taken for granted, among others. Learn the pitfalls so you can judge whether this is the best option for you. It’s the easiest to arrange but that may come with a price.
Tip #2: “Contracting 101”
Independent contracting (a.k.a. 1099) in the U.S. is called sole-trading in some countries. You are paid by the hour and may work directly for a client or through an agency. This offers the freedom to leave a bad job (or client) with little fuss, and choose projects, commutes, and more that you want to do (instead of your company making these choices for you). But it offers no benefits and is a more precarious lifestyle.
Tip #3: “Consulting 101”
Lying somewhere between employment and contracting, consulting through your own company means you have a reliable employer (yourself!). But that does not mean you always have clients. You can arrange your own benefits, just like a contractor, and you seem more serious than one, but there is more overhead and some companies won’t do a corp-to-corp arrangement with you at all.
Tip #4: “Employees Have More Financial Security”
Neither contractors nor consultants get unemployment benefits when not working. They do not get severance, either, or matching 401k contributions that can really add up. They also do not get paid until 30-60 days after submitting an invoice, depending on the client, and this can make life difficult until you’re established. Employees get paid every two weeks or twice a month.
Tip #5: “Government Contracting is Risky”
Government contracts are usually heavily contested, and always come with expiration dates. This means they can lose the contract and let you go. Or they will woo you for one contract, then put you on another that is terrible for you but good for them. You won’t have much if any say in the matter, as you’re expected to “take one for the team.” That job you loved can suddenly become the job you hate.