What'll it cost me to leave my W-2 job for the indie life?

Hi June,

I currently work full time and my salary is 95k + bonus (8k this year). I am married, own my own home. I have no children. I have been offered a consulting position at a 1099 rate of $65 hr. My other option is $55 hr as W-2.

I am an IT professional. I have expressed an interest in taking the position as a 1099 consultant. I donate to charity at least 10% per year. My wife is employed, but I would probably make her my employee for tax advantages. I don't go to the doctor often at all and am an aggressive investor for now, not interested in the lower interest returns of 401-Ks and such. Dentist twice a year, and we own 2 automobiles, one paid off and one leased.

What is your opinion? Do you think it would benefit me to move over to be independent?

Thanks, Dan


Hello Dan,

There are two sides from which to look at your question.

For only $10 more per hour, definitely not. For a measly $10 an hour you are giving up benefits which could be vacation and sick pay, unemployment compensation, health insurance. And your employer is saving those costs. Don't think of your health costs as two dental visits per year it's the skiing accident or the fall in the bathtub or worse for which you have medical insurance. Take a look at this on my website
What'll it cost me to leave my W-2 job for the indie life?

On the flip side, you could reduce taxes substantially by being able to directly deduct all business expenses. And with your wife on payroll, if you give her good benefits like a pension and health insurance, it may make it worthwhile.

I suggest you push the company for more than $65 per hour.

Best,
June