Thinking of going the independent contractor route?

Yesterday, I posted about giving this a try, if you’ve been considering it.

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Coincidentally, I had a full time employee call me that’s taking this path but didn’t know what their hourly rate should be.

I advised not to take your annual salary and divide by 50 (or 52) or however many weeks you work in a year.

You need to account for your loaded cost which is going to be ~20-30% more than just your salary.

This includes things such as: payroll taxes (SS, Medicare, Unemployment, Workman’s Comp), insurance (medical, dental, life, long-term disability), 401K matching, PTO, possibly an office, desk, laptop, cell phone reimbursement, training allowance, etc.

But the biggest intangible is RISK.

That should be included in your hourly rate calculation and that’s up to you to decide.

While also considering what a company (overall market) will pay for your services.

Easiest example:
Your current salary: $100,000
Salary + loaded employer cost: $120,000 – $130,000
Equates to hourly: $60-$65/HR
Going independent (1099): I suggest at least $65-$70/HR

There’s many variables at play, just don’t sell yourself short and think it’s a 1 to 1 match, as it shouldn’t be.

Hope this helps a little.

Note: I’m not HR, an accountant, or the IRS.

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