Are Employee Benefits Actually Worth as Much Money as You Think?

After working there for almost 2 years, the CTO of the company pulled me aside and told me they had to let me go. They simply couldn’t find enough paying contract work for my skill set.

What Next?

Going from a great salary with a nice benefits package to being unemployed was tough.

Hey, We Want to Hire You as an Employee!

During that decade, several companies tried to entice me to shutter my business and come in as a highly compensated employee.

Should I or Shouldn’t I? The Relative Value of Benefits Usually Decreases as Salaries Increase

Marketing (or Business Development) takes care of finding paying work (at least when they can), Legal takes care of writing and reviewing contracts. HR takes care of payroll.

Employer Portion of Payroll Taxes

If you’re self-employed, you pay self-employment taxes which cover both the employee and employer side of payroll taxes.

Worker’s Comp

Minimum Wage and Overtime Pay

Health Insurance (Including Dental, Vision, etc.)

Unemployment Contributions

Paid Leave

Disability Insurance (Short-Term and Long-Term)

Retirement Savings

Life Insurance

Other Benefits

The Total Value Offered by a Job

Stated differently, if you’re self-employed and bringing in $150,000, a company would need to offer you a salary higher than $120,000 (and/or more generous benefits than we estimated here) to make it financially comparable.

The Bottom Line

Depending on your income, the financial value of being an employee runs from huge at low income to “nice to have” at high income. If you’re offered the same number of dollars of salary as your self-employed profits, plus benefits, it may be financially worth it. If you’re offered much less than that, it may not be.

Financial Planning

For More Posts about

3 Reasons Why a Financial Advisor is Worth the Money

Financial Advisors for Immigrants & Foreign Nationals

Financial Advisors for Family-Oriented Professionals