My wife and I have both take turns working as a contractor. I don't know your occupation, but we both typically work engineering type fields. We usually expect contract pay to be about 20% less than what they bill us out as to the client. (for example my wife maid around $24/hr. and was billed out at $69 at a former company, when laid her off and brought her back as contractor she gets $55 -$60 depending on task).
The IRS has certain rules to be a contract employee. Know them....to you they are a bill of rights. This is to prevent employers from hiring you as contract just to avoid the 7.5% FICA they pay (And yes, you will now pay this...this is noe of the reasons you make more...you would be paying 15% instead of 7.5%). I can't recall all of the guidlines but there are things like They can't require to work specific hours or a specific shift. They shouldn't provide you with a permenant desk, and this kind of thing. Basically, they need to treat you like an outside company/consultant. If you are just another employee, they need to make you an employee and give you the benefits.
It can be very profitable when there is work, but remember if there is now work that day, they say thank you, go home, and no pay.
We have bounced back and forth, always keeping somebody as an employee to keep the benefits. Make sure you get everything in writing up front, including travel time, expense reimbursemnt. These can become haggling points. As a contractor our office is our house. Our time begins when we leae our office, not arrive at their job. Also make sure you include in the contract that you get paid in a timely manner no matter the relationship is between your client and theirs (if applicable). We have had client who had projects get cancelled or fall apart to the point the did not get paid. Then they wanted to tell us that we would not get paid. That is a no go for us. Many of the clients want to give us a contract that says we get paid when they get paid. This is a big no-go for us also. We did this at first, but then some clients may not bill until a job benchmark (say 70%) that they do not attain until 6 monthes after our part was done. We put in up-front that all invoices are net 30.
Dan