Contracting vs. FTE in the US: What to Think About

When choosing between a contract job and a full-time one, keep these big distinctions in mind:

Job security:

Contracting is usually short-term and can stop at any time. FTE employment, on the other hand, are more stable and normally require notice before ending.

Benefits: Full-time employees enjoy a lot of perks, like health insurance, a 401(k) match, paid time off, and sometimes stock options. Contractors frequently have to buy their own insurance and plan for retirement on their own.

Compensation: Contractors usually make more per hour or day than full-time employees, sometimes 20% to 50% more. But when you take into account self-funded perks and taxes, the disparity generally gets less.

Flexibility: When you work as a contractor, you have more control over your schedule and the tasks you work on. FTE roles, on the other hand, usually have predetermined hours and are based on what the organization needs.

Career advancement: Contractors normally don't have many chances to go up within the company or get help from more experienced people. On the other hand, FTE roles come with organized growth routes and leadership training.

Taxes and paperwork: Contractors have to pay their own self-employment taxes and make quarterly estimated payments. Employers, on the other hand, take care of tax withholdings for FTEs.

Company culture and networking: Contractors don't fit in as well with the company's culture, but full-time employees get to create greater networks and ties with other employees.

As a 1099 contractor, you can make $180,000 a year with no benefits. As a full-time employee, you would make $150,000 a year with full benefits.

Contract

FTE

Contractors usually have to pay for their own health insurance (around $6,000 to $12,000 a year), take care of their own retirement plans without help from their employer, and deal with unpaid time off. While this is going on, FTEs commonly get 401(k) matches worth thousands of dollars a year, paid vacation and sick leave of around $10,000, and maybe stock grants or RSUs for tens of thousands of dollars, depending on the firm.

An FTE package can actually be worth more than a full-time job when you add together all the benefits and equity, even though the base wage looks lower.

Long-Term Effects on Your Career Pros of Contracting

A quick way to get extra money for short-term aims. Ability to quickly look into other industries or skill sets. More freedom and flexibility.
Cons of Contracting:

Less job security.

No long-term rewards like stock options.

Taxes and benefits make things more complicated for businesses.

Pros of FTE:

A steady salary and a career that is safe.

Getting help with career growth and mentoring.

Building money over time through equity and retirement plans.

FTE Cons:

Less flexibility in the timetable.

Slower salary growth if not proactively managed.

How Contracting Can Help You Get a Full-Time Job

A lot of big organizations, especially in IT, use contracting as a means to "try out" workers before hiring them full-time.

Companies turn contractors into full-time employees for these reasons:
They think it's worth it to avoid paying for extra hiring and onboarding.
Proven contractors already know how to use the company's tools and follow its rules.

High-performing contractors can help teams deal with less work right away.
How to make it more likely that you will convert:
Do more than what is expected of you in your main job.
Join meetings, Slack channels, and informal catch-ups to build contacts inside the company. Make it clear that you want to stay on as an FTE.

Show that you can work well with others and fit in with the culture. Write down and tell people about your measurable influence.

Example: A contractor at Salesforce became a full-time project manager after showing leadership during a significant launch and making connections with other employees. She said on LinkedIn that her proactive approach, which included asking for mentorship chats and sending weekly updates to senior leadership, made a big effect.

Important Point

Pick contracting if you want more money right away, more freedom, and the chance to swiftly try out numerous work settings.

If you value security, creating wealth over time, career advancement, and structured growth, choose FTE.

Contracting can definitely help you get to FTE, but you need to be smart, visible, and loud about what you want.

Ask for input and then do something with it.
Ask your management and coworkers from other departments for input on a regular basis. Show that you can quickly put suggestions into action. This shows that you have a growth attitude, which hiring managers adore.

Use feedback sessions to quietly show that you want a permanent job.

Sign up to work on projects that include people from other teams or are very visible. Raise your hand for things that go beyond what your contract says you can do. High-profile projects often get the attention of executives. Getting involved indicates that you care about long-term success.

These initiatives provide leadership a better idea of your skills, which makes it more likely that they will hire you.

Create champions in the workplace

Find and build relationships with "internal advocates," or coworkers or leaders who can say good things about you.

When selecting how many people to hire or how much money to spend on conversions, strong internal support is typically a vital consideration.

Show that you own your thoughts

Even if you're on a contract, operate like an FTE: focus on results, not simply outputs.
As if you have a long-term stake in the game, suggest ways to make processes better, point out risks, and provide solutions.
Managers notice when someone thinks beyond “just doing tasks.”

Show how your actions have an effect (but don't brag about it)

If it's appropriate for your culture, you can give progress reports at team meetings or in weekly summary emails.

When sharing about accomplishments, focus on how they affected the business. For example, say, "This change cut onboarding time by 15%," not just "I finished my ticket."

Plan when to make your request

Start the topic about conversion after reaching a big goal or during performance review cycles.
This is in line with times when teams look at their budgets, number of employees, and long- term employment demands.

Learn how the organization plans its headcount.
Find out when teams ask for full-time employees (usually every quarter or year).
Knowing this can help you time your conversion proposal correctly, which will make it more likely to be approved.

Help make the team culture better

You can join social gatherings, Slack channels, or internal interest groups if you want to. Show that you care about the team beyond your contract; it shows that you are a good fit.

Learn new skills

Find the skills that the team is missing right now and start building them up. You can show that you not only fit a current role, but also provide value to it.

Putting it all together

In summary, to go from contractor to full-time, you need to do great work, make it easy for the employer to say "yes," and become so important to them that they can't imagine life without you.