I have over 20 years experience in over 10+ languages, tools frameworks. Active on github and open source also.<p>Trying to make a lot of $$ in next 5 years and quit the rat race.<p>Everywhere I apply for contract jobs, the recruiter / person with job says they can only do W2 and not independent 1099 or corp 2 corp contract.<p>I don't need benefits (have it from my partner) and W2 rates are much less than Independent 1099.<p>So what's the deal ? Why do recruiters and firms insist on W2 in Bay Area?<p>Also how do I set my W2 rate vs my C2C expectation.<p>Ex: If my 1099 / Independent rate is 100 $ / hour, what would the equivalent W2 rate be, so I don't lose money?
I don't know why W2 is so common over there, but you should be hitting up LinkedIn and reaching out to recruiters that way. There are plenty of 1099 opportunities to be found. Ensure that you get contracts with fixed time periods so that you can plan your cash flow a little easier. (It's not a hard and fast guarantee, but a six-month contract is much easier to plan around than some flexible contract scenario where the client can fire you at literally a moment's notice.)<p>Also, $100/hr for 1099 is really low for your experience. You'll get work easily, but will need to work literally all of the time to make ends meet. You should aim for at least $240/hour.<p>Think about it like this. Your experience would probably net you a $175-200k/year salary in the Bay Area. That's the money you take home (before taxes). This <i>does not</i> include offset compensation (equity, bonuses, VACATION) and benefits (401(k) with match, health insurance (medical, dental, sometimes vision, HSA, FSA, etc.), commuting discounts, etc.). I don't know the exact numbers, but after factoring all of this in, I would wager that the company is actually paying $500k/year for your services in the W2 scenario. That's ~$240/hour assuming a 52-week business year at 40 hours/week.<p>Additionally, your experience makes you a premium product depending on how you sell yourself. If the talent pool for one of the languages that you know (say, Delphi) is dying but is still used for critical business functions that make companies serious amounts of money, you can increase the margin on your rate even more. 20 years of experience is a lot.<p>Lastly, for the businesses that you're probably trying to go after (big institutions with beefy IT budgets), trying to sell yourself short will actually make you appear to be <i>less</i> experienced than you really are. These businesses are used to paying top-dollar for quality and/or insurance, so you should play the game in kind.<p>TL;DR: Pay for LinkedIn; use competing salaries PLUS BENEFITS to calculate your rate; add some margin to the top; get the fuck out of the rat race.
There are plenty of businesses that would prefer to pay you or your small corp directly without a w2. They are usually the smaller companies or individual people. The w2 is common when a contracting company is managing all of the contractors for a medium to large company. It could be that those contracting companies want uniformity between their Human Resources but I'm not sure. I think you just need to branch out and talk to a few new recruiters or contact businesses directly. Sell them on yourself and then just tell them you always do 1099. Someone will bite if you pass the interviews.<p>Lastly the w2-- it could be at least 15 percent less to be equivalent to 1099 since you don't have to pay he employer share of social sec, but you should still shoot for as high as possible given that a contract (even w2) is more volatile than a long term gig and the employer should pay a premium for that over a regular hire.
Clients prefer W-2 because of the so called assumed "risk of liability". They don't want 1099s on their payroll because of fear from IRS that they could be tagged as employees and hence needing to pay fines and extra benefits that they don't want to. I personally think that is bullshit but that is what it is. In fact, some large clients force their vendors to only hire W-2 even if the payroll is run by the vendor company and not the client. So that is why a lot of these clients have started preferring W-2 and it is increasing difficult to find direct contracts with large clients who offer 1099 (many still do but rare these days).<p>Now to your question about the rate between W-2 and 1099. It depends. Generally, a W-2 rate is usually going to be less than 1099 due to factors such as Payroll tax, benefits etc. AT the end of the day, someone has to pay for those regardless but in case of 1099, you the contractor is responsible to figure that out (risk is on you) vs W-2 where the employer has to figure that out for you.<p>You first need to ask these questions to ANY recruiter you talk to:<p>1. Are you a direct/preferred vendor to the client ? This is critical because if they middleman to the actual vendor, they will take their own cut thereby reducing the size of the pie for you. They are of not use to you and never deal with 3rd party recruiters. Only deal with direct vendors who talk to clients directly.<p>2. If they only offer W-2, is it with Benefits or without benefits. Yes, you can get W-2 with some benefits (health insurance etc) even if you are a contractor. This is important to know because if you don't necessarily want benefits, you could potentially negotiate a higher rate even on W-2 by asking them not to pay for benefits .<p>Once these 2 questions are answered, then you can start playing with numbers to figure out what you should ask for at the very least to even break even. Items to consider:<p>- Your current salary<p>- Do you receive any bonus on average every year ?<p>- Vacation days you take in a year<p>- monetary value of benefits like Health insurance, 401k etc<p>- How much Payroll taxes are paid by your employer ? Remember, as an employee, you only pay your portion (about 7.5% SS + Medicare) but as a contractor, you will have to handle that part yourself (if 1099).<p>You need to figure out all these and then get to a daily/hourly rate.<p>MOST IMPORTANT: Your daily/hourly rate must consider the number of billable hours/day you will work in a year. You need to factor in downtime. Contracts can end quickly at times. So you need to factor the extra month or so that you may be in transition.<p>Finally, in Bay area, my general assumption is that $100/Hour on 1099 is low for a skilled and experienced developer.<p>Shameless plug: I wrote a simple calculator to convert salary to a daily rate in the US. It is a general estimate but should give you an idea:<p><a href="https://codegeek1001.github.io/salary2consultantcalc/" rel="nofollow">https://codegeek1001.github.io/salary2consultantcalc/</a>