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You're a contractor. You don't get a "raise". You tell your client that your rates are changing and you would like to renegotiate your rate. Also - if you're

You're a contractor. You don't get a "raise". You tell your client that your rates are changing and you would like to renegotiate your rate. Also - if you're in a contract job for 4 years, there's something wrong

sometimeshuman 4y ago
" if you're in a contract job for 4 years, there's something wrong" Depends on your goals. I've been contracting at the same company for 10years. It gave me the flexibility to run and operate a successful side business and take unpaid vacation time whenever I want.
- JAlexoid 4y ago
  Let me correct myself - if you're in one contract doing the same thing for 4 years, there's something wrong.(IMO) I love contracting and it's my preferred method of working. However - staying in one contract for 4 years is a red flag. (barring some really long term projects)
  - samstave 4y ago
    as a contractor for over a decade of my 25 year career - I would do big builds and some contracts were only like 9 months... and when I would apply at other places they would always ask me, because they were ignorant of what I did - "Why were you only there 9 months" And I would have to explain "Because that was what I was contracted to do" The only contract that I was terminated early from was FB -- but that was because I accidentally, through my status reports, revealed that a certain executive named "the Captain" was hiding build schedule delays for the Sydney office (he went on vacation so I had to speak directly to the contractors building out the office, and found out they were behind schedule by a month and over budget and I put it in my status report, and upon his return from vacation he had me terminated for revealing that info) and the fucked up part was that my manager and team just left the area, then I got a call from the contracting company telling me I had to leave the building - and I was commuting to work via the FB van... so I was stranded in Menlo Park....
yieldcrv 4y ago
Employee - stuff a max of $20,000/yr into US retirement plans if your employer offers one, and pretty much no other tax deductions Contractor - stuff $500,000/yr into a combination of US retirement plans, and a ton of other deductions Don't forget, these plans grow tax free. Your 401k can invest in a Private Equity fund once it is also an accredited investor or can make the minimum investment amount. I pretty much hate W-2 employment. It's the slowest way to make money and taxed the highest. I'm familiar with places where contractors are like second-class workers hoping for a conversion to employment, that makes sense at low salaries. I think people are not revisiting the concept accurately at different income ranges.
- yamtaddle 4y ago
  Not sure how you'd get anywhere near $500,000 (employing a spouse and a couple of your kids offering them maxed-out matching contributions, too, maybe?) but I do suspect the most common way anyone approaches the 401k contribution limit is through kinda-shady family businesses in already-rich families. AFAIK you can't even hit 50% of the annual limit without nearly-unheard-of employer matching, because such a high proportion of the annual limit can only come from an employer—you can't contribute it yourself. Still, without some real weirdness I'm not sure how you'd get near $500,000, even factoring in HSAs (primarily another tool for the already-well-off to avoid taxes—the trick is that if you put money in but never pay medical bills out of it you can save those receipts and get all that money you would have spent tax-free at retirement, while it's been growing all those years pre-tax like a normal retirement account) and using both IRAs and 401Ks.
  - yieldcrv 4y ago
    When you attach your a single participant 401k to your own S-Corp (or to even just yourself as an individual), you can do maximum employer match alongside maximum employee contribution. This moves your max retirement contribution from $20,000 to $60,0000 as of time of writing. (you can also do the employee contribution exclusively with your W-2 employer, and if you have other sources of non-passive income you can just do all employee match for the other $40,000 into your own) then you can also construct a Cash Balance plan, which adds a lot more and linked to your age, every year. ie. a 30 year old can contribute maybe $80,000 while a 65 year old can contribute maybe $450,000. Its not a "above age 50 catch up" like 401ks and IRAs have. any cash amounts in any of these plans can be rolled over into whichever other kind of retirement plan is preferred. so if you don't like compliance duties of a 401k, you can roll that into an IRA. If Cash Balance plan is too restrictive on investable assets, you can roll that into a 401k or IRA. You can roll any of this into the Roth products if you don't mind paying income tax that year.

sometimeshuman 4y ago

" if you're in a contract job for 4 years, there's something wrong" Depends on your goals. I've been contracting at the same company for 10years. It gave me the flexibility to run and operate a successful side business and take unpaid vacation time whenever I want.

JAlexoid 4y ago
Let me correct myself - if you're in one contract doing the same thing for 4 years, there's something wrong.(IMO) I love contracting and it's my preferred method of working. However - staying in one contract for 4 years is a red flag. (barring some really long term projects)
- samstave 4y ago
  as a contractor for over a decade of my 25 year career - I would do big builds and some contracts were only like 9 months... and when I would apply at other places they would always ask me, because they were ignorant of what I did - "Why were you only there 9 months" And I would have to explain "Because that was what I was contracted to do" The only contract that I was terminated early from was FB -- but that was because I accidentally, through my status reports, revealed that a certain executive named "the Captain" was hiding build schedule delays for the Sydney office (he went on vacation so I had to speak directly to the contractors building out the office, and found out they were behind schedule by a month and over budget and I put it in my status report, and upon his return from vacation he had me terminated for revealing that info) and the fucked up part was that my manager and team just left the area, then I got a call from the contracting company telling me I had to leave the building - and I was commuting to work via the FB van... so I was stranded in Menlo Park....

yieldcrv 4y ago

Employee - stuff a max of $20,000/yr into US retirement plans if your employer offers one, and pretty much no other tax deductions Contractor - stuff $500,000/yr into a combination of US retirement plans, and a ton of other deductions Don't forget, these plans grow tax free. Your 401k can invest in a Private Equity fund once it is also an accredited investor or can make the minimum investment amount. I pretty much hate W-2 employment. It's the slowest way to make money and taxed the highest. I'm familiar with places where contractors are like second-class workers hoping for a conversion to employment, that makes sense at low salaries. I think people are not revisiting the concept accurately at different income ranges.

yamtaddle 4y ago
Not sure how you'd get anywhere near $500,000 (employing a spouse and a couple of your kids offering them maxed-out matching contributions, too, maybe?) but I do suspect the most common way anyone approaches the 401k contribution limit is through kinda-shady family businesses in already-rich families. AFAIK you can't even hit 50% of the annual limit without nearly-unheard-of employer matching, because such a high proportion of the annual limit can only come from an employer—you can't contribute it yourself. Still, without some real weirdness I'm not sure how you'd get near $500,000, even factoring in HSAs (primarily another tool for the already-well-off to avoid taxes—the trick is that if you put money in but never pay medical bills out of it you can save those receipts and get all that money you would have spent tax-free at retirement, while it's been growing all those years pre-tax like a normal retirement account) and using both IRAs and 401Ks.
- yieldcrv 4y ago
  When you attach your a single participant 401k to your own S-Corp (or to even just yourself as an individual), you can do maximum employer match alongside maximum employee contribution. This moves your max retirement contribution from $20,000 to $60,0000 as of time of writing. (you can also do the employee contribution exclusively with your W-2 employer, and if you have other sources of non-passive income you can just do all employee match for the other $40,000 into your own) then you can also construct a Cash Balance plan, which adds a lot more and linked to your age, every year. ie. a 30 year old can contribute maybe $80,000 while a 65 year old can contribute maybe $450,000. Its not a "above age 50 catch up" like 401ks and IRAs have. any cash amounts in any of these plans can be rolled over into whichever other kind of retirement plan is preferred. so if you don't like compliance duties of a 401k, you can roll that into an IRA. If Cash Balance plan is too restrictive on investable assets, you can roll that into a 401k or IRA. You can roll any of this into the Roth products if you don't mind paying income tax that year.