7 ms·

Usually as a contractor you should charge a lot more than the 3% plus $8/hr. You don’t bill 2080 hours per year, and have to pay for many other incidentals. I

Usually as a contractor you should charge a lot more than the 3% plus $8/hr. You don’t bill 2080 hours per year, and have to pay for many other incidentals. I think a 50% premium is more appropriate.

a-dub 4y ago
this is correct. direct contractors without agencies typically pull 1.5x-2x annualized base salary in hourly rate form. this is because contractors are estimated to spend 40% of their working hours in a non-billable state (like waiting on contract negotiation delays, for example). additional overheads like accountancy professional services, insurance brokers, insurance and equipment as well as the time spent dealing with them are significant. if a contractor converts to fte, or a long term contract (12+ months) then these figures adjust down. but for short term contracts, the per hour rates can appear quite high (although actual gross totals tend to not be much in the scheme of things). this is why the mean rate from the last hn contractor salary poll was $100-$150/hr.
andrewmcwatters 4y ago
Correct. This article is regarding W-2 contract to hire (or temp to hire) agreements, and not consultancies.
bena 4y ago
This is for Contract-to-Hire though. Which is a little different. You aren't going to be billing this company anyway. You are essentially setting a fixed rate for a fixed amount of time with the expectation of full-time employment after that time. So it does make sense to essentially contract yourself at that rate. But he's saying when you do, add in the 3% plus $8/hr to cover the things not being covered by your employer during that time. It'll make the transition a little smoother. You won't feel as if you're shafting yourself. I'd also add that if I were Contract-to-Hire, I'd also stipulate that once I'm hired, I'm a full employee. My contract period is my probationary period and after I should be treated as a full employee with all the benefits that entitles me to: health care, 401k matching, etc.
- andrewmcwatters 4y ago
  Correct. The funny thing is W-2 contract to hire agreements are employee agreements the whole time. 1099-NEC would be the appropriate way to report non-employee compensation but many businesses do not do this.
- mathattack 4y ago
  As long as they have the right to not hire you, you should pad in cost for downtime.

a-dub 4y ago

this is correct. direct contractors without agencies typically pull 1.5x-2x annualized base salary in hourly rate form. this is because contractors are estimated to spend 40% of their working hours in a non-billable state (like waiting on contract negotiation delays, for example). additional overheads like accountancy professional services, insurance brokers, insurance and equipment as well as the time spent dealing with them are significant. if a contractor converts to fte, or a long term contract (12+ months) then these figures adjust down. but for short term contracts, the per hour rates can appear quite high (although actual gross totals tend to not be much in the scheme of things). this is why the mean rate from the last hn contractor salary poll was $100-$150/hr.

andrewmcwatters 4y ago

Correct. This article is regarding W-2 contract to hire (or temp to hire) agreements, and not consultancies.

bena 4y ago

This is for Contract-to-Hire though. Which is a little different. You aren't going to be billing this company anyway. You are essentially setting a fixed rate for a fixed amount of time with the expectation of full-time employment after that time. So it does make sense to essentially contract yourself at that rate. But he's saying when you do, add in the 3% plus $8/hr to cover the things not being covered by your employer during that time. It'll make the transition a little smoother. You won't feel as if you're shafting yourself. I'd also add that if I were Contract-to-Hire, I'd also stipulate that once I'm hired, I'm a full employee. My contract period is my probationary period and after I should be treated as a full employee with all the benefits that entitles me to: health care, 401k matching, etc.

andrewmcwatters 4y ago
Correct. The funny thing is W-2 contract to hire agreements are employee agreements the whole time. 1099-NEC would be the appropriate way to report non-employee compensation but many businesses do not do this.
mathattack 4y ago
As long as they have the right to not hire you, you should pad in cost for downtime.