Contractor Pay Calculator
Calculate contractor hourly rate, take-home pay and equivalent salary after self-employment tax.
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Frequently Asked Questions
How much more should a contractor charge vs an employee salary?
Contractors should charge 1.4-1.6x the equivalent employee hourly rate to break even. As a contractor you pay both halves of FICA (15.3%), receive no benefits (health insurance $500-$700/month), no paid time off, no 401k match, and must cover your own equipment and software. Divide your target take-home by 0.65 to account for taxes, then add benefit costs.
How do I set my contractor hourly rate?
Formula: (Target annual salary + benefits value + business expenses + taxes) / billable hours. On a $100,000 target salary: add $15,000 benefits, $5,000 expenses, $30,000 taxes = $150,000 needed. Divide by 1,920 billable hours = $78/hour minimum. Research market rates on Glassdoor, LinkedIn Salary, and industry surveys to validate competitiveness.
Should I form an LLC as a contractor?
An LLC provides personal liability protection and potential tax benefits. With a single-member LLC taxed as sole proprietor, tax treatment is identical to freelancing. An S-Corp election (typically worth it above $60,000-$80,000 net profit) lets you split income between salary and distributions, potentially saving $5,000-$15,000 in SE tax annually. Consult a CPA before electing S-Corp status.