$150 per hour consulting is not the same as $150/h salary. With consulting you have to pay for your downtime, the time you use to acquire clients, your insurance, etc.
If I was doing full time consulting I would charge $200 per hour.
I only give the discounted $150 per hour rate because I work full time at another company.
Since someone else brought up tax advantages - I don’t pay social security tax on my self employed income. Because I max it out on my full time job. I also have an Individual 401k plan that I can contribute 20% of my self employed income as the employer contribution. I can’t contribute my self employed income as the employee contribution though because I max that out at my full time job.
Having combination W2 and 1099 income gives a ton of tax benefits.
It is especially not the same due to loss of tax advantaged benefits like health insurance ($20k+ per year if you have a family), 401k matching ($10k+), DCFSA and HSA matches ($5k), and then the 8% FICA taxes up to $10k that have to come out of your pocket.
What these comments ignore is that, if you form an LLC for your consulting work you have access to a massive number of deductions that do not exist for someone who is an employee. My recommendation is to have a conversation with a good accountant and have them quantify the potential differences for you.
That's all stuff you can calculate and price into your rate. It's not like you just take the salary number they offer and divide it by two to get your rate.
Sounds like he has a steady client that accommodates as many hours as he likes at that rate, and has done so for a dozen years.
I imagine he has covered his business development expense by now.
This is how I do it too, by the way. Long term relationships with good companies. It's more like contracting, but without the 40h expectations of a contractor. ( Unless I feel like working 40 hours in a given week for some reason).
> Sounds like he has a steady client that accommodates as many hours as he likes at that rate, and has done so for a dozen years.
It sounds like he’s basically been employed by this one company for 11 years, albeit on a contract basis.
These positions exist, but they’re not all that common. Usually if a company is paying a single person a premium for many years they’ll just hire a full-time person and be done. The average freelance contract you find should not be assumed to be a decade-long opportunity.
