2

I have no experience in working as a C2C contractor with a client. Yet that is the only way this company will hire me. In fact I have not had a contractor W2 job in ten years; I've been someone's employee til recently.

I have been looking for a W2 position at about $83K, or W2 hourly of $45 to $50.

I do not know what percentage I need to increase these "employee rates" by so that I pay additional taxes without loss to my take home pay.

Thanks for your help.

If you think you need more info on my situation - let me know.

  • You will get better answers in the Entrepreneurs area, but: Figure out what the cost will be of all the benefits you won't be getting as a contractor. Figure out what the cost is of lining up gigs, and of the time between gigs. Make sure your income covers those in addition to your desired take-home pay and taxes. That gives you the base amount you need to charge for this to be a viable business. Then add whatever the market will bear. Note that this often means at least doubling what a regular employee's salary would be; don't be afraid to charge what you're worth. – keshlam Jan 7 '17 at 1:44
  • I'm voting to close this question as off-topic because it's not really a Personal Finance question. – keshlam Jan 7 '17 at 1:46
  • do you have a url for the Entrepreneurs area ? – Harry A Jan 7 '17 at 1:55
  • It's called Startups.SE, although I find this question more on-topic for this site than that one. It's as much about employee benefits as self-employed benefits, and both are on-topic here. – Brythan Jan 7 '17 at 2:55
  • 1
    @keshlam This question is on-topic here. The word "corporation" does not disqualify it as this is a single owner small business and the question relates to income equivalent to be realized by the individual. See meta.money.stackexchange.com/questions/15/… and meta.money.stackexchange.com/questions/1910/… – Chris W. Rea Jan 7 '17 at 4:19
3

If your employer rents you out to a customer the general guideline is that they have to charge double your rate to make money.

If you make $83K a year you see on your paycheck that your employer is paying you about $39.90 per hour (83K/2080) but you don't really work 2080 hours per year. You have holidays, vacation, sick...

Of course the employer covers your benefits, and their portion of social security, and state unemployment insurance.

Plus overhead for admin, billing, payroll, electricity, rent, equipment...

Plus profit.

In the end they have to pay for all of this and spread it over your billable hours (2080-vacation - sick - holidays). Which some will guesstimate as pay the employee $83K, charge the customer $83 per hour.

Now do you need to charge that much. No. You don't have all the overhead, But you still have the reduced hours, and the need to pay benefits. Though if you have insurance from another source, then you may not need to to charge for that.

I have been looking for a W2 position at about $83K, or W2 hourly of $45 to $50.

That might be a little low. 83K divided by 1880 (2080 - 5 weeks) is $44.15 an hour. That doesn't give you much room for benefits and required expenses.

Note: W2 contractor is not a correct term. If you are W2 you are an employee. If you are a independent contractor you will get a 1099.

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.