I was offered $200k/year to take on more work
One of my gigs is working out quite well for me. They are paying me a reasonable salary for some consulting work on their platform. We work well together, they have been transparent and I understand that they are trying to grow their company which explains some of the hiccups along the way. They recently made me an offer for around $200,000 worth of annual compensation to take on more work with the company.
My dilemma is primarily whether I want to commit more time to this company. Currently, I am employed part-time and earning about $3,400/month after taxes while working maybe 2-4 hours a week.
They are offering a total compensation package of $200,000 per year in return for a full-time commitment. Let’s break these terms down.
I can decide how I want to receive this sum of money. I can be either be a traditional employee and have my healthcare and 401k covered by them (it would come out of the $200k) or I can take a 1099 distribution and pay for my own benefits.
This is a wonderful flexibility option which most companies won’t offer their employees. Each household is different, the person receiving the income should be the one to decide how they want to receive it in order to adopt the optimum tax planning strategy.
If I agree to their benefits packages then they would offer me a 401k along with profit-sharing in order to reach my retirement contribution limit of $54,000, set by the IRS.
I no longer need disability insurance and because I am single with no dependents, I don’t need life insurance.
Malpractice insurance would be covered by them.
Stock options, also referred to as equity options, are offered to certain employees in order for them to “buy in”. This is quite sought after in the startup world.
I would have to buy my stock options. The most I would be offered is 1% which would cost me $100,000 per year. Which means I could earn a salary of $100k gross and buy $100k in stock options from this company.
Should the company go under, it’s adios money. Should they do very well then I may get to cash in my chips. I wrote about this in a previous post so I won’t repeat it here, but the contingencies can be a mile deep.
Stock options are a wonderful way for a person to roll the dice on their income. Instead of accepting a guaranteed $100k, for example, this can be traded for a percentage ownership in the company. This might turn out to be a bust or it might turn out to be a profitable gamble.
To make this decision, it’s important to understand what your risk tolerance is, how much you need the income and how well you understand the company you’re working for.
the work commitment
There is no expectation for me to do any work except for seeing patients. I don’t have to get involved with the business side of the practice or take on any administration roles.
In a way, I was bummed out about their decision to only offer me a clinical role. I have been waiting for this day to come when they would pitch me their “full-time” offer, hoping it would include some work leading the company and not just serving the coffee.
Is there a potential for a CMO role with this company in the future? Maybe. Is it worth it to stick it out as a worker bee until that opportunity arises? Perhaps not.
I have zero interest getting back to full-time work, at least nothing regimented. As it is now, I write for several hours every day, I read a ton and go to the gym. There really wouldn’t be much time to do any regimented work.
They weren’t able to give me a definitive idea of the hours needed which is understandable. However, they wanted me to commit my 9a-5p to them. Not that I would have to work the entire time, but that’s when they would want me to be available.
Do I need the money?
I would be able to stash $53k away in tax deferred accounts and probably keep about 60% of the leftover $150k. That would be a net paycheck of $7,500/month.
Reaching a point in one’s personal finances when the income isn’t needed is important – it’s sort of an evolutionary step. You might feel ungrateful for passing on the opportunity and others will consider you pompous but you know better.
Money is by far the most important thing in this world as viewed by human beings – at least their actions. We murder over it, we torture over it, we oppress, divorce, fight and suffer in order to obtain more of it.
I admit that it would be great if I could get my taxable investments to a point where they could just create a passive, care-free $3,000/month for me… but why? I don’t need that, I want that. Which means that it’s motivated by a bit of greed.
Plenty of other arguments could be made and I can talk my way into and out of all sorts of decision trees regarding this job offer. The fact remains, I have more than enough assets to secure a safe retirement so I don’t need more income.
Some of the projects which I’m pursuing are money-making, but the project itself is my priority and not the income it generates. Accepting this full-time position would be mostly for the sake of the income.
If I did accept the work commitment
As a startup business, they are hoping to bring someone on who will at minimum work 40 hours a week for them to get the business going. There will certainly be days and maybe months when there is very little work but the commitment remains.
I would be going in with the assumption that the workload won’t increase immediately and if it should escalate then I can reevaluate my gig. I’m not sure if this is an entirely fair thing to do to them.
If I have to be available from 9-5 to answer patient questions then I won’t be able to commit myself to other gigs. That bit of inflexibility is a turnoff. One of my biggest assets right now is time and the flexibility I have doing it with it as I please.
I wouldn’t be expected to do any weekend or evening work which is a plus. But again, a startup business will depend on my flexibility to help them out should the need arise during those times.
If I passed on this opportunity
More free time. I would be able to keep enjoying my free time if I passed on this opportunity. There would be flexibility to volunteer, climb at the gym, travel and spend hours with friends on lounging at a cafe.
I would no longer have to be glued to my cell phone to answer incoming patient requests.
A full-time job requires a structured day which is easier for some to arrange – not me.
More future opportunities. A physician who has more free time and less dependence on income can enjoy many luxuries, such as dabbling in different ventures, one of which might turn out to be a ‘calling’. I don’t feel that I have come across that for myself, yet.
Holding out and not jumping on opportunities which arise isn’t easy but it’s the right thing to do and would offer the best chance of finding just the right gig.
Still able to work with them part-time. I don’t want to leave these guys hanging. They have a great cause, offering healthcare access to those who cannot afford it. Even if I don’t take the full-time gig with these guys, I could at least continue working with them part-time.
Guilt. One of the feelings I am dealing with is guilt. Passing up on easy income is much harder than I thought. There are all sorts of emotions involved such as feeling ungrateful and doubting the security of my investments.
What if shit hit the fan and I can’t get a job? What if my investments failed me? What if I end up needing much more than I have saved? A part of me worries I’m going to regret passing on the opportunity.
This startup has taught me a lot of new skills regarding the startup world such as marketing, sales, and dealing with C-level executives. In the end, they weren’t able to offer me something inspiring enough to be willing to take on more work. I will pass on this opportunity which will be tough news to break to these guys. Return for future posts to see how things went.