Contractors: 1099 vs W-2 rates

[kgokal]

So im wondering what percentage should i ask for over what a W-2 rate would be?

Since 1099 i would have to pay SS/Medicare that the W-2 issurer would normally pay.
And i'd have to do my own tax quarterly payments.

Or am i totally off base here?

 

[spidey07]

1099 should be about 30-35% higher rate. You also have to think about benefits, etc.

 

[highland145]

7.65% from you and like amount from employer is what gets paid in.

Agree with spidey.

 

[GuitarDaddy]

I worked as a 1099 consultant for a few years, I always based my bids off of going W2 rate + 50% or more. Besides the tax and bennies differences you have to look at down time, time and cost of marketing yourself, etc..., etc....

Plus you are usually competing against folks from an agency where their price is also marketed up to cover the overhead and profit of the agency

 

[kgokal]

Crap, i didnt ask if W2 came with Benefits. DO they normally?
Last contract job i had didnt, and it was W2...

If W2 isnt benefits, would 10%+W2 suffice for taxes/timeoff/....

 

[mugs]

Crap, i didnt ask if W2 came with Benefits. DO they normally?
Last contract job i had didnt, and it was W2...

If W2 isnt benefits, would 10%+W2 suffice for taxes/timeoff/....

If you're a contractor but they're giving you a W-2 instead of a 1099, they're probably not giving you benefits.

 

[SoCalAznGuy]

There are significant tax benifits to a 1099 over a W2 as well. 1099 allows you have significantly more tax deductions and has better retirement options.

 

[Zargon]

Crap, i didnt ask if W2 came with Benefits. DO they normally?
Last contract job i had didnt, and it was W2...

If W2 isnt benefits, would 10%+W2 suffice for taxes/timeoff/....

depends I guess

my employer tosses 8% of my paycheck as a double match into my retirement plan.

thats 8% of my paycheck as a benefit right there.

private health insurnace can cost way more than 10% of the paycheck ETC. It all depends on how you rate it.

I was basing mine on the offer of 'how much do I need to pay you to get you to quit your job and be a contractor for me'

so that all equated into my total pay for me....as it was a full time gig

 

[dmw16]

I've never seen a contract job that has benefits regardless of 1099 or W2.

 

[EagleKeeper]

I've never seen a contract job that has benefits regardless of 1099 or W2.

Some agencies will provide some benefits after a set time working for them (1Yr).
Usually vacation time, however, I had one agency that allowed purchase of health insurance. Many people will not stay with an agency/contract for more than one year's time.

 

[Tsaico]

When I speak with the people to "interview" I determine how much overage to go with. As a contract worker, you will see lots of different spreads of people. The the ones that I jive well with and get a good feeling from, I usually go with 35% over, the ones that I don't particularly like or the ones that are unprofessional, 50% and wittle down if then really want my skill set.

 

[spidey07]

I've never seen a contract job that has benefits regardless of 1099 or W2.

I've never had one that didn't include vacation and full benefits, 401k, etc.

 

[Zebo]

You lose UE which costs employers on average 4% of gross pay
You lose SS/MEd which ~15% of gross pay
You lose HC and workmans comp which costs ~20% of gross pay
You lose retirement which costs ~10% of gross pay

Sounds like about 49% you need to add plus opportunity costs. GuitarDaddy is about right. As usual. Age has it's wisdom if nothing else.

 

[Zebo]

I've never had one that didn't include vacation and full benefits, 401k, etc.

401k is illegal for non employees but hey whatever.

 

[spidey07]

401k is illegal for non employees but hey whatever.

You're an employee of the contracting company.

 

[Zebo]

You're an employee of the contracting company.

Ah I see I thought we were talking straight up self employed 1099 contractor. make appropriate deductions from my list then for whatever is not provided.

 

[spidey07]

Ah I see I thought we were talking straight up self employed 1099 contractor. make appropriate deductions from my list then for whatever is not provided.

W2 contracting also generally pays more than the salary position including benefits. You become a money maker (you generate revenue for the contracting company), instead of an expense (salaried employee).

Then there's all that juicy overtime.

 

[Zebo]

W2 contracting also generally pays more than the salary position including benefits. You become a money maker (you generate revenue for the contracting company), instead of an expense (salaried employee).

Then there's all that juicy overtime.

Well there are rules like 20. Believe me I'd like to convert all three of my employees to 1099. Either way they generate plenty of secondary income or they would not be there.