RE: Independent Contractor Rates
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When I first started I took my hourly and added 30%. It worked for me but then again I didn't have to pay for insurance since my wife loves her job and has great benefits.
Sovereign ingredient for a happy marriage: Pay cash or do without. Interest charges not only eat up a household budget; awareness of debt eats up domestic felicity. --Lazarus Long
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Nemanja Trifunovic wrote:
mrMagik3805 wrote: then subtract another 20% for necessary on the job expenses (meals, travel, gas etc.) Why substract these expenses? Full time employees have them too - they are typically not paid by employers.
Because you can deduct some of them on Schedule C of your tax return. Moreover you'd be a fool not to! (See an accountant or talk to the IRS for specific cases.)
CQ de W5ALT
Walt Fair, Jr., P. E. Comport Computing Specializing in Technical Engineering Software
Walt Fair, Jr. wrote:
Because you can deduct some of them on Schedule C of your tax return
I don't think that was the point. He was trying to show how to determine a contract rate to be comparable to a salary.
Walt Fair, Jr. wrote:
Moreover you'd be a fool not to!
Unless you use the standard deduction and don't itemize your expenses :)
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Walt Fair, Jr. wrote:
Because you can deduct some of them on Schedule C of your tax return
I don't think that was the point. He was trying to show how to determine a contract rate to be comparable to a salary.
Walt Fair, Jr. wrote:
Moreover you'd be a fool not to!
Unless you use the standard deduction and don't itemize your expenses :)
Nemanja Trifunovic wrote:
Walt Fair, Jr. wrote: Because you can deduct some of them on Schedule C of your tax return I don't think that was the point. He was trying to show how to determine a contract rate to be comparable to a salary.
Actually he asked why some of the referenced items should be considered when an employee doesn't count them. The difference is quite clear -- for an employee with those expenses, it comes out of their pocket after taxes. For a self employed person it is a business expense that comes out before taxes, which is much better. If you want to compare things comparable to a salary, then you need to estimated after tax spendable income. Schedule C is for business income and expenses.
Nemanja Trifunovic wrote:
Walt Fair, Jr. wrote: Moreover you'd be a fool not to! Unless you use the standard deduction and don't itemize your expenses Smile
I think you're confused with the difference between business expenses and standard deductions. For a self employed person, you take your gross income and subtract business expenses, like gasoline or car mileage, business use of your home, office supplies, sales tax, equipment needed to run the business, etc. That gives you your net income -- i.e. Schedule C. Then you take credit for the standard (or itemized) deductions (Form 1040), part of health insurance, the credit for part of the self employment tax, etc. I stand by my statement: If one spends money running a business and doesn't deduct it as a business expense, they're a fool. It can make a big difference!
CQ de W5ALT
Walt Fair, Jr., P. E. Comport Computing Specializing in Technical Engineering Software
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If you work on a 1099 not w2, in the US, you must consider Insurance (Med+Den+Life+Vis), and possibly liability, then add to that normal operating expenses, gas, wear and tear, supplies etc and finally profit margin. So if you charge as a 1099 $80/hr you can subtract at least 30% in benefits, minus another 35% for taxes(fed,state etc), then subtract another 20% for necessary on the job expenses (meals, travel, gas etc.) and finally add at least 40% markup for you profit, you can see that even at $80/hr you can't really make it. That's why you need to charge, after considering the location your the job is in and how deep the pockets of your client really are and what the market you will be competing in will bear, a much much higher rates. It's not the contractor overating their services, it's the companies combining (unlike the contractors) to manage the market to their liking). :-O mrMagik3805
I'm self employed and have charged $85 an hour for horrible projects with unreal deadlines lasting 3 months. It stank. I've charged $25 an hour for podunk work (as much as I wanted but boring). I've charged $50 an hour for the most amazing work I've ever had and it's been unreal. You need to stop snowballing all work into one profile. Here's a profile you never considered. Mine. I work in the mid-west in state A. One of my clients works on the west coast in state B. Another client works in the gulf coast in state C. All clients are the same parent company. My insurance is costs are around $600 a month (Ick!). If I insured Katie they'd be $4,600 a month. Now that's pause for thought. We actually tried. Every day I have to be to work by 8:00... Maybe...Sometimes... I roll out of bed at 7:59, grope my wife, pet my dog and grab a pitcher of ice water on my way into the office that is attached to my house (I love my office.). I sit in a leather chair all day long. I code. I eat out of the fridge. I see my kids constantly. I don't drive anywhere. Hardly every. The living I now make is not going to make me a Trump but it is helping me get caught up. I love it and wouldn't change it for the world. My point in this is that don't snowball stuff. Life is way to subtle a journey to abuse it like that. Take your time. Feel your way around. You don't need $100 an hour unless you drive 3 hours each way, uphill in a snowstorm on flat tires. I mean... WOW!!!
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I'm self employed and have charged $85 an hour for horrible projects with unreal deadlines lasting 3 months. It stank. I've charged $25 an hour for podunk work (as much as I wanted but boring). I've charged $50 an hour for the most amazing work I've ever had and it's been unreal. You need to stop snowballing all work into one profile. Here's a profile you never considered. Mine. I work in the mid-west in state A. One of my clients works on the west coast in state B. Another client works in the gulf coast in state C. All clients are the same parent company. My insurance is costs are around $600 a month (Ick!). If I insured Katie they'd be $4,600 a month. Now that's pause for thought. We actually tried. Every day I have to be to work by 8:00... Maybe...Sometimes... I roll out of bed at 7:59, grope my wife, pet my dog and grab a pitcher of ice water on my way into the office that is attached to my house (I love my office.). I sit in a leather chair all day long. I code. I eat out of the fridge. I see my kids constantly. I don't drive anywhere. Hardly every. The living I now make is not going to make me a Trump but it is helping me get caught up. I love it and wouldn't change it for the world. My point in this is that don't snowball stuff. Life is way to subtle a journey to abuse it like that. Take your time. Feel your way around. You don't need $100 an hour unless you drive 3 hours each way, uphill in a snowstorm on flat tires. I mean... WOW!!!
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Rex - The Deepak Chopra of CodeProject. ;)
"It's so simple to be wise. Just think of something stupid to say and then don't say it." -Sam Levenson
I had to Wiki that. :-O I'm not sure if it's a compliment or an endorsement or some amusement but I'm inclined to believe it might be small parts of each and a lot of poking me in the ribs. :laugh:
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http://www.erlglobal.com/index.php?pageName=rate[^]
Need software developed? Offering C# development all over the United States, ERL GLOBAL, Inc is the only call you will have to make.
If you don't ask questions the answers won't stand in your way.
Most of this sig is for Google, not ego. -
http://www.erlglobal.com/index.php?pageName=rate[^]
Need software developed? Offering C# development all over the United States, ERL GLOBAL, Inc is the only call you will have to make.
If you don't ask questions the answers won't stand in your way.
Most of this sig is for Google, not ego. -
Well it could have bugs but it is based on my spreadsheet that I use to calculate rate quotes for clients. The one item I didn't place there is equipment and software expenses which are crucial but those can be fudged in the other areas. The most important item I think is the down time (risk) and holiday and vacation time which seems to be the most overlooked part from anyone I ever speak too. Just for a reference the United States federal government states that the average person takes at least 16 weeks to find a new job. Contracting and consulting is basically constantly looking for work. Even if you have 2 good years in a row the third can wipe it out if it isn't built into the rate in a reasonable fashion. Realistically, when confronted with on-site contracts at $35/hr I just turn them down. It costs me more in expenses than to even bother and not working is fun.
Need software developed? Offering C# development all over the United States, ERL GLOBAL, Inc is the only call you will have to make.
If you don't ask questions the answers won't stand in your way.
Most of this sig is for Google, not ego. -
I'm self employed and have charged $85 an hour for horrible projects with unreal deadlines lasting 3 months. It stank. I've charged $25 an hour for podunk work (as much as I wanted but boring). I've charged $50 an hour for the most amazing work I've ever had and it's been unreal. You need to stop snowballing all work into one profile. Here's a profile you never considered. Mine. I work in the mid-west in state A. One of my clients works on the west coast in state B. Another client works in the gulf coast in state C. All clients are the same parent company. My insurance is costs are around $600 a month (Ick!). If I insured Katie they'd be $4,600 a month. Now that's pause for thought. We actually tried. Every day I have to be to work by 8:00... Maybe...Sometimes... I roll out of bed at 7:59, grope my wife, pet my dog and grab a pitcher of ice water on my way into the office that is attached to my house (I love my office.). I sit in a leather chair all day long. I code. I eat out of the fridge. I see my kids constantly. I don't drive anywhere. Hardly every. The living I now make is not going to make me a Trump but it is helping me get caught up. I love it and wouldn't change it for the world. My point in this is that don't snowball stuff. Life is way to subtle a journey to abuse it like that. Take your time. Feel your way around. You don't need $100 an hour unless you drive 3 hours each way, uphill in a snowstorm on flat tires. I mean... WOW!!!
I agree! Life is more subtle a journey, and it sounds like you have made the tradeoffs you need to make the life you like -- currently sitting in a chair coding all day with the family and fridge near by. Actually I do that my self -- at times. Nothing wrong with that! As long as the math works. The landlord, mortgage company, or the taxman isn't that interested in my or my family's feelings, and that rightly so, that's my responsibilty. Forgoing insurance for your family (I assume Katie is family), not having any extra cash to stash for a raining day or for the future (I know you won't belive this but..no matter how good you feel now you can't do this forever), is not making you a Trump. I don't know what your expenses are but they sound low and that's fine..I am telling my wife all the time, it's amazing how little money you really need to survive, but as Jack London said "The proper function of [mankind] is to live, not to exist". Sorry, didn't mean to sound so preachy, but your responsed sounded more philosophical than mathematical. It's ture a guy in India, or Vietnam, or Mexico who will work for $10/hr (check Odesk.com) may have a much lower cost of living and so he feels he is being paid correctly for his efforts and that's fine for him. Of course maybe the reason he really getting paid $10/hr is because he has no other choice. That's why it the responsibility of his country's governement and business community to create conditions to gradually raise his industry up to where they may have parity with a country like other countries that pay higher compensation e.g. UK, India, US. I have read some compaines are ever outsourcing Indian work to Vietnam because the cost is even lower. That's why I said you must also factor in what the market your client is as well. MrMagik3805