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For anyone trying to do this math, in the US, you need to reduce the equivalent pay by about 10-15% for self-employment tax if you're 1099. It's more useful to
by jaggederest 3y ago
For anyone trying to do this math, in the US, you need to reduce the equivalent pay by about 10-15% for self-employment tax if you're 1099. It's more useful to start with 1500 hours a year, as well, if you're truly contracting (not "full time paid as a contractor for one client") since you'll need to find new contracts and that will take up a surprising amount of your time.
I sometimes joke that, when contracting, I spend 80% of my time billing work for client projects and the other 80% (unpaid) getting new projects, leaving me only 80% (unpaid) of my time to spend managing relationships with clients and collaborators, doing taxes, and maintaining the existing business.
- ohdannyboy 3y agoI was an employee of a contracting company so I was being taxed like an employee.
- jaggederest 3y agoWhich is the best scenario but I've seen people get burned by thinking hourly salary == hourly contracting rate :)
- jrockway 3y agoInsurance is another cost you'll have to pay yourself. I don't really know what's available for contractors, but consider health insurance, life insurance, accidental disability insurance, etc. (Dental insurance isn't really a thing. Budget $400 for your two checkups and don't get any cavities.) Also consider your retirement savings and what you're missing out on from employer 401k matches. Finally, keep an eye on cost of living and adjust your rate accordingly. The dollar is worth at least 20% less than it was 3 years ago. Charge 20% more.