Should You Change From Consultant To Employee?

As an independent contractor (consultant) working for an organization, you’ll more than likely run into at least one instance where the client is so happy with your work that they want to bring you on board as an employee. Should you do it?

There is no hard and fast answer to that question. It really depends on what your vision and goals are for both your business and your personal life. And you must remember that if you become an employee, the working relationship will normally change. You’ll become a part of the organizational culture.

So let’s look at just the facts.

We’ll take a scenario where you are working for an organization under contract which states you will provide 20 hours of service per month for $50 an hour. You’re making $1000 a month self employment income and are organized as a sole proprietor. You are responsible for paying all taxes on this income. The client wants you to become a part time employee that works 40 hours per month for the same amount of money. No benefits are included in this package. Doesn’t sound like much of a deal, does it?

The small benefit to this is that if you become an employee, the employer will pay a portion of your Social Security and Medicare taxes. That’s it. If you want to calculate the tax, visit this tax calculator for specific amounts. 

So the real answer comes back to your vision and goals. Here are some questions to help you decide.

  • Will this employment gig turn into full time, long term employment? Do you want it to?

  • Are you willing to give up the extra 20 hours a month you could use to service another client so you can work for this one?

  • If you turn down the offer, will you lose the work entirely? Are you willing to let this happen?

If you answered Yes / Yes, Yes, No then it’s probably a good idea for you to strongly consider saying yes to this offer. If you answered No / No, No, Yes you will probably not be happy accepting the employment option.

It’s unfortunate that this employer has made an offer that is not a great one. Frankly, it stinks in my book. But it’s yours to decide – or – bite the bullet and negotiate better terms.

What do you think? Suggestions for moving from consultant to employee? Please leave a comment.