<prompt> Human: Hi pf,Im this guy unemployed after 2 days contract work: llc or sole proprietorship Ive been contracting with one company for the last 3 months. The work and people are great, and they are talking about bringing me into the organization as an employee rather than a 1099. For our next contract Ill be a W-2 employee, but itll be through a placement firm. After that one ends is when they are talking about having me as a full employee.Which, initially, sounds fantastic: 401k, health insurance, access to an office while continuing to work from home most of the time, etc etc.BUT, and heres where the wisdom of pf could come in handy, itd be a lower billable rate. Maybe the total compensation would go up hey, cheap health insurance!, but I wouldnt be in charge of how to distribute it.Ignoring the personal considerations, such as having clients versus bosses and coworkers, is there a decent way to puzzle through these differences?Ive seen 1099 versus W-2 calculates online, and thats not quite what Im looking for - I need questions to think through, or something like that.So, ultimate question: in what financial ways am i better off as an employee versus a contractor, and vice versa?edit: 30s, married, no kids and not having any. Making enough as a contractor to put about 25 towards retirement thanks you, SEP IRA and Roth IRA. While the first two contracts were 1099, the next one will be a W-2 through some intermediate company. Assistant: I was wrestling with this situation around 3 years ago. I was a W-2 contractor through a contract agency. A permanent position opened up which was a pay cut salary wise. Once I added up the benefits: Insurance, HSA, DCFSA, 401K matching, bonuses, vacation, and other employee perks, I would be taking only a minor cut in compensation. I ended up taking the full time position, and 2 months later every contractor in my group was cut with no notice. When budgets are cut, the contractors are the first to go. The added stability, advancement potential, and overall improvement in peer respect where more than worth making a little less at the time. 3 years later I make 15 more than I did as a contractor.Human: This is really great, thanks.Theres all sorts of intangibles, like if I do well with a manager versus clients, which arent quite what pf does.Also, with every contract with these folks, Ive had a higher rate. Which I wont be able to negotiate for if Im an employee.My experience tells me that a full time position gives the illusion of stability, but can end with no notice and for no reason, too.I think their plan is to fill gaps with contractors until they have enough fulltimers, and then stop. In which case, this train is time limited unless I jump on. Im hoping to clarify if thats the goal, but its exactly the sort of information Im unlikely to get.  <response>: Im a consultant that does programming as a W2 for the consulting company. Ive had the opportunity to see lots of different large companies deal with this from the tech side of things.Its incredibly easier to cut a contractor than an full time employee from a legal, financial and morale perspective for most companies. Unless youre indispensable and upper management knows it its not unusual for companies to cut even indispensable contractors and then spend 10x more money later trying to clean up the mess youre going to be the first to go if money dries up. One company Ive spent a lot of time working for has easily cut contractors 10 times in the last 5 years without any hubbub. In comparison, they laid off like .5 of employees the other year and it was a HUGE DEAL.You just need to figure out how much that stability is worth to you and make the calculation obv on top of the value of the other benes and tax considerations a W2 gets. I know some programmers that have good savings andor no families and recognize that its not hard at all to get new programming work and their modifier is very low. I know other people that are terrified of layoffs that would take a 50 pay cut to do their best to avoid that uncertainty. 