W-2 vs. 1099 Hourly Rates

[getBent()]

I'm thinking about doing some work on a straight contract. What is an appropriate pay rate increase for 1099 work vs. being a W-2 employee?

For example, if I was making $50/hour as a W-2 employee should I be asking for $60/hour as a 1099? $70?

I know I'll be hit with another 7.5% in self-employment taxes, but what's appropriate for the other added expenses (bookkeeping, billing, etc.)

 

[mishatx]

In reply to:

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[getBent()]

Thanks for the response mishatx. This is new area for me and I thought I was erring on the safe side with a 20% increase - just goes to show how new I am. I'm not sure if I'll be able to get another 50% on top of my normal rate, but it's good to know that's a realistic number.

Thanks again.

 

[CO Horn]

As a W-2 employee you pay 7.65% for social security taxes. As a 1099 contractor you pay both the employee and the employer portion, so it doubles to 15.3%.

We pay contractors 40-50% more than a W-2 employee, so if you would make $50/hr as an employee, I would ask for $70-$75 minimum as a contractor.

 

[BA93]

Also think about how much time you will be working or not. People who employ contractors sometimes conveniently forgot that contractors don't get 10 paid holidays or a few weeks paid vacation. And sick days? of course not.

But if they are expecting you to work 50 hour weeks than you might be coming out way ahead.