Unless there are other factors you do not mention, the W2 option will likely yield you more money assuming the same hourly rate.I assume you live in the US. If both options pay the same rate, say $50/hour, then your employer (on the W2 option) will pay taxes, workman’s comp insurance, etc. on your behalf (above and beyond the $50/hour salary). If you choose the 1099 route, you will have to pay those taxes and insurance out of your $50/hr rate. Also, as a W2 employee, you will probably receive full-time employee benefits from your employer - in addition to the $50/hr rate. If you need medical/dental insurance, want your employer to contribute to a retirement plan/401K, and want paid time off (holidays, vacation, sick leave) — then the cost of those benefits can easily add up to 30–40% of your salary. In other words, you would need to increase your 1099 rate by another 35% or so to cover the cost of benefits that you would need to purchase and paid time off that you will not get as a consultant. If the company hires you as a 1099, your holidays are not paid. Your vacation and sick leave time is not paid.My wife formed her own LLC and got advice from several people regarding the consulting rate she should use. The general advice she got from financial advisors was to take your last hourly rate as a W2 employee, and:Increase the starting hourly rate by 28–35% to cover state and federal taxes and workman’s comp insurance, etc. (a range because of different tax rates in different locations).If you have to provide your own benefits, add another 30–40% (which my wife didn’t because she is covered by my insurance).Estimate your business costs and include a percentage to cover your overhead. What’s that? Well, it may be minimal if you just work from home and use your own phone and computer. But if you have to purchase a company car, rent office space, pay for advertising, buy/lease office equipment like a copier, etc. - those costs will add up. Sure, as others have noted, you can write off some costs as business expenses, but that doesn’t mean they are free. If you incur $50K in expenses, Uncle Sam doesn’t give you a $50K break on your taxes. And some expenses are only partially deductible on your taxes, like most business meals at 50%. I’m not a tax expert, so I advise you to consult with a financial advisor or accountant.Finally, add some additional amount for ‘profit’ - say 10% - to cover costs of growing the business, uncertainties/risk, and as a “bonus” (which you will not get typically as a consultant, but which you probably would as a W2 employee).There are definitely some benefits of going the 1099 route. If you are the sole breadwinner of the family, and the consulting gig is not solid or long-term, I would think strongly about staying a W2 employee. If you are more financially free to take risks, and you want to try the entrepreneurial path, give it a shot.Edit: After reading the other answers, I thought I would add one other factor. My wife is a contracts professional. As a 1099 consultant, she helps her clients negotiate multi-million dollar contracts. She does intellectual property training. She spent years as a bookkeeper and has years of experience in recruiting/HR. She is a very smart and capable business-woman. But the administrative side of running her small LLC is too much for her. She paid more than $2,500 in her first year of business for an accountant to set up her books and do her taxes. Now her annual tax prep is a fraction of that, but she has an accountant doing her monthly invoicing and maintaining her Quickbooks accounting records. She still has to file the quarterly IRS 941 forms and payments. She still has to deal with unemployment claims from part-time employees who filed for unemployment after their short-term gig ended. She has to do monthly status reports (essentially a timesheet with supporting data) to submit with her invoices.There is a trade-off between spending money to hire professionals to deal with the accounting, taxes, administrative tasks - versus doing them yourself and taking time away from your paid consulting gig. This is why you will hear stories of small business owners spending 14–16 hour days running their business and then dealing with the administrative / back-office side of the business. If you have never run your own company, I just thought you should be aware of the administrative side of overall operations.