Transition From Contracting To Full Time —What Developers Need To Know

Starting a new job comes with managing emotions, details, and important decisions. If you’re transitioning from contracting to taking on a full-time role, there are several key points that can help make your transition smooth and easy. While this resource does not offer legal advice, we will focus on need-to-knows for taking on a full-time position after being self-employed.

If this topic is not exactly what you are looking for in regards to Independent contracting, try these other posts from our blog…

Other BWB Resources Related To Contracting:

What You Need To Know About 1099 vs W2 Classifications

Becoming A Contractor—What You Need To Know To Get Started

Weighing Your Options-- Decision Making And Career Moves

What’s The Significance Of Accepting A Full-Time Job?

From a financial standpoint, the biggest aspects setting employees apart from contractors are taxes and their eligibility for benefits. Many contractors in tech have a specialized skillset that allows them to take on short-term projects or work for multiple clients at a time. There is a type of developer that thrives in this working routine, but others prefer the opportunities and stability that can come with working for an employer full-time.

If you’ve been self-employed, you are familiar with how contractors are not subjected to tax or FICA withholding, but must pay their own self-employment tax quarterly. Also, contractors are not eligible for benefits like healthcare (usually), unemployment compensation or worker's compensation benefits. It’s fair to conclude there is more independence, but also potentially more risk in being self-employed.

Taking on a full-time role comes with substantial changes, but it can also mean a simplification of the side-hustle lifestyle. Working at one place of business, within hours set by the company, and being eligible for benefits, from healthcare to vacation, are major pros for those on team full-time. On top of that, employees are covered by federal and state laws such as overtime rules, workplace safety laws, and employment anti-discrimination laws.

Paperwork Principles / Employment Essentials

With all of that to consider, it comes down to your personal career goals and the path you are trying to build. Often times, full-time positions come with built in pathways for leadership development and career growth, whereas in independent contracting that path may be less clear. If accepting a full-time role has been your goal, or is a logical next step, it’s time to focus on the details.

Fully understanding the difference between having a 1099 or a W2, and the laws surrounding each type of employment in the state you work in, is crucial for avoiding legal discomfort down the line. Refresh your 1099 versus W2 knowledge in our full post on the topic. Also take the time to read these resources from the IRS regarding classification of employees and independent contractors.

For the sake of clarity, a W2 form, also known as the Wage and Tax Statement, is the document an employer is required to send to each employee and to the IRS at the end of the year. This form reports the employee's annual wages and the amount of taxes withheld from their paychecks.

Employers also use W2 forms to report the Federal Insurance Contributions Act (FICA) taxes for their employees throughout the year. These forms must be filed on or before Jan 31^st for the previous year to remain compliant with the IRS and other government organizations. Properly filing these forms allows you to file taxes accurately, and helps keep you in financially good standing as you transition from being a contractor.

Taking On A Full Time Position After Being Self-Employed

From tech startups to enterprise companies, it’s common for businesses to utilize independent contractors for maintenance projects, bug fixes, short-term launches, or as part of other growth initiatives. As this trend continues, more tech companies will test out the “try before you buy” method. This arrangement eases individuals into the company to ensure a great fit before offering a full-time position.

From first glance, it appears as though companies want exceptional output without offering full benefits or other perks that employees get, but so far it is just one way to mitigate the high turnover rate tech has become accustomed to. Think of it this way, contract-to-full-time situations put less pressure on both parties entering into a relationship. If things are going well during the contract period, the hiring team and the contractor can begin onboarding that person full-time with confidence and excitement. If the job is not a good fit for the candidate, they have a chance to end the relationship at an agreed-upon time without additional complications.

Some Best Practices For New Employees:

1. It’s Ok To Negotiate
   • Especially if you are transitioning from a contract-to-hire arrangement into the same company you have been working for, know it is commonplace to negotiate and get the most out of that transition. Negotiating offers of employment is an artform in itself (see BWB’s offer negotiation tips here), but knowing your skillset’s market value is key to getting fair pay without pricing yourself out of a job. Ask about your salary, the company’s culture, benefits or equity, and expectations of your new role so everyone involved is on the same page.
2. Finding A New Routine
   • If you have been contracting for any amount of time, working for one company only will come with some adjustments. Embrace the learning curve, and be flexible. You’re likely to find ways to combine your old methods of working with new incoming tasks. Take note of how others in your new company approach problem solving with one another and lean in.
3. Is The Grass Greener?
   • When starting a new job, or leaving a situation that did not align, it is easy to put on positivity-blinders, or rose-colored glasses. Two opposite concepts, they both boil down to seeing too many positives in one situation over another. For example, you may find yourself yearning for the autonomy of contracting and working alone, but did you ever experience isolation and loneliness due to not having a team? Were you so stoked to get better benefits you forgot about readjusting your working hours to accommodate other people? Sure, change can be hard, but this old psychology trick asks us to flip negative thoughts around and challenge our own viewpoint.
4. Build Connections
   • Investing in relationships with your coworkers and leadership team makes transitioning to full-time less stressful. It’s more likely than not that people are there to help you, and need your skills and personal expertise to move a project forward. Sending an email to a coworker with questions does not make you a nuisance, it means you are engaged in being a better contributing member to the overall goals. Learn more about how working relationships have changed since the pandemic in this post.

Time To Jump On The Bandwagon

The bandwagon of your new company, that is. We understand certain circumstances and career decisions influence candidates taking one offer over another, so ultimately it is about finding what’s right for you. Let’s say you’ve tried independent contracting, and are tired of the responsibility and steep rate of paying self-employment taxes. Alternatively, after a year away from people and offices, joining a team and forward-thinking culture could sound refreshing. Whatever your goals are, the reasons for transitioning away from contracting are diverse.

Working with a recruiter can be beneficial for aligning those goals and having someone advocate for you during your job search. From taxes to tech stacks, make sure to get all of your questions answered. After that, you are ready to dive into your new job. Congratulations!! Securing a full-time position in not easy, and your new team is thrilled to bring you on. If you have more questions or concerns about transitioning from contracting to full-time, reach out and we can help.

Here at BWBacon Group, we know and live what you are experiencing as an employer or job seeker in Denver, Boulder, Dallas, San Francisco, New York City or any of the other cities we work in. We believe great recruiting starts and ends with understanding people.

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