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Choosing A Job Between Good Salary and Good Benefits

Choosing A Job Between Good Salary and Good Benefits

I have been offered two jobs, one as an independent contractor and another as an employee.  The independent contractor offers more money, but the employed position pays benefits.  Which is the better position?


Compare apples to apples, and oranges to oranges.  First, how many hours are you required to work annually in each position?  Will you pay for your own malpractice insurance as an independent contractor, and are there any expenses you can write off as an independent contractor through the organization or through your own LLP, or LLC?  If you are being offered an employed position, exactly what are the benefits and what is their value? If you are offered a 401K plus a 403 b, for example as an employee, how much is the contribution from the employer?  How much is the annual limit you can defer tax-free to your retirement plan compared to the amount you can defer with a retirement plan you set up for your own corporation?  There are different limits the IRS allows you to write off with a SEP IRA, or a Simple IRA, then a 401K.  How much are those limits?  If you are offered a position as an employee, your employer is automatically responsible for ½ of your FICA, FUTA, SUTA taxes, and you are responsible to pay half.  If you are an independent contractor, you are responsible to file and pay both sides of your FICA, FUTA, SUTA, Medicare/Medicaid employment taxes

As an independent contractor, you can establish yourself as a business. Through your business, you can write off (this simply means deduct) expenses from your income and not pay income taxes on the expenses.  This means you can deduct things such as mileage expenses, computer expenses, internet expenses, office expenses, and more.  As an employee, you are not able to deduct these expenses, especially with the changes in the new tax laws, unless you itemize, and chances are that you may not itemize your expenses, and even so, many expenses are still not deductible.

It is in your best interest when being made an offer as an employee to drill down the details and the dollar value of every single item.  Make an excel spreadsheet and itemize the value of the employment offer, and the value of each benefit as compared to the value of the independent contractors offer, along with the benefit of tax write-offs.

If you get the details, drill each detail down you will be able to compare the offers on an apple to apple comparison.  You might be surprised at the actual bottom line, and an offer that seemed like much more money in comparison to another often comes out to be a less desirable financial offer