First and foremost, contracting can be a great opportunity to land your next job, fast track your career, and even give yourself a bit of a raise. When job seekers start a new contract position after switching from a full-time role, it's usually amazes them how quickly the process moves. “Wow… that was fast,” is a common response - but don't move so fast that you forget to ask yourself some important questions first.
While you consider the questions below, bear in mind that those who are critical of contract positions may unwittingly provide false information about these types of positions - anything but a full-time job lacks benefits and stability are among common misconceptions. Jobspring Partners actually offers a health care insurance package and PTO, which is a growing trend in companies that hire contractors. A contract role can be an easy and flexible way to gain employment in a fast-moving IT industry. Have kids? Imagine not being tied to a 9-5 schedule. Trying to get your foot in the door with a large company you already applied to in the past? An alternative path to the inside could be through contracting.
Be sure to have the answers to these important questions from the company, recruiter, or just yourself before committing.
How long is the contract?
Know how long you’ll be working on this contract. That way, you’ll know when you need to start thinking about the next contract or the next steps to converting full-time. Contract lengths can run anything from 4 weeks all the way to, well, forever.
Is this for a project that has been secured?
Find out if the business is already won by the contracting company because sometimes firms like to start the interview process BEFORE being awarded the business and have the ability to put contractors on. You certainly don’t want to turn down other offers you had when the job you accepted technically doesn’t exist yet. A simple way of asking is: “If I accept the offer, how soon can I start?” The answer you’re looking for should be a something like immediately, on Monday, or right after your two week notice.
Am I going to be hired as a W-2 employee or as 1099?
The main differences come down to taxes. As a W-2 employee, you will receive pay checks with tax withholding already taken, and you’ll receive an IRS W-2 from your employer in January of the following year. If you are hired as a 1099 contractor, you’ll get full pay with no tax deductions, but you are also responsible for paying your own taxes come April 15th of the following year.
It’s tempting to opt for a 1099 since your pay checks are bigger, but that smile quickly goes away when you realize you not only have to calculate how much you owe at the end of the year, but in fact you OWE MORE! You get tagged with self-employment tax which is another 13-14% of your income on top of the taxes you already pay. As a perk, however, you can write off multiple expenses for your work as well (transportation, computers, phone service, etc.) Think about these points before deciding which is better for you.
What happens when the contract ends?
It’s important to know what your options are. Some staffing companies have other projects they will have needs for, and it’s good to know if you might qualify for those. The benefit of using a technology-specific staffing firm is that a great majority of their other clients will have needs that match your skill set so that when you’re done with the current contract, you increase your chances of landing another quickly with minimal downtime.
What is the realistic time-frame of converting temp-to-hire?
If the job is a contract-to-hire position, it’s a good idea to have an understanding of when you might be converting to full-time status. This sets the expectations on both sides, and ensures that you and your potential employer are on the same page. Typically the timeline can be anywhere from 3 to 6 months. If you find yourself in the eighth month with no talk of conversion, it’s time to revisit the conversation with your hiring manager.
What salary should I expect when I accept a full-time offer following my contract role?
Most people get a bit nervous when talking about salary and compensation, but it's important to be aware of what the potential salary would look like if you convert to full-time. While it may be an uncomfortable conversation to have now, it’ll save you a headache down the road. You don’t want to find yourself having worked 4 months into a contract only to find that the salary they are thinking isn't close to what you were expecting. Of course, it’s important to be realistic as well. If you are a W-2 employee getting paid $45/hour, you should be considering a base salary of around $90,000 (inclusive of benefits and such).
For a first timer, a contract position can look intimidating. Don’t let that stop you from considering the opportunity and asking the essential questions before coming to a decision. Working with a recruiter can take some of the uncertainty out of the equation if you're unsure, but it comes down to getting all the answers you need in order to make the right decision.
Still have questions? You can ask below.
This article was originally published on 11/09/15 and has been updated to reflect current data and insights.