Contract vs Fulltime
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I am returning to contract programming after a long time. Forgive my ignorance in this matter. Trying to Google the answer really confused me further. Is there a good rule of thumb to determine at what point does dollars per hour translate to an annual salary? For example, a 6 month job in California pays $90/hour. The same company is offering a salary of $115K/year with NO benefits (no health insurance nor retirement plan) That part comes out of the pay per year. I am thinking a simple linear chart where if I work a certain time (3.2 months) contracting I will earn more. But I am surely missing something: FICA is twice the amount, instability of hours, no vacation time, do I need workmen's comp in CA? I seriously doubt if the company will fold over tomorrow, but it could happen too. Could one of the contractor folks point me in the right direction? I would really appreciate the input. Sincerely
This is not my original work, I can't remember which CPian gave it to me, but:
Quote:
Start with the number of hours you work in a year - 2080 hours in a year 1960 working hours in a year (10 federal holidays) 1920 working hours if you take two weeks vacation For multi-year contract (3+ assume no risk) for all others risk = 1 month + 40 hours for every month under 6 months. (Time to look) 1760 working hours available for 6 month contract Find annual salary you want: $50k Find cost of health insurance, etc $5k (just for giggles) $55k/1760 = $31.25 Now that is gross, so you need to take into account taxes, etc, etc, etc
veni bibi saltavi
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This is not my original work, I can't remember which CPian gave it to me, but:
Quote:
Start with the number of hours you work in a year - 2080 hours in a year 1960 working hours in a year (10 federal holidays) 1920 working hours if you take two weeks vacation For multi-year contract (3+ assume no risk) for all others risk = 1 month + 40 hours for every month under 6 months. (Time to look) 1760 working hours available for 6 month contract Find annual salary you want: $50k Find cost of health insurance, etc $5k (just for giggles) $55k/1760 = $31.25 Now that is gross, so you need to take into account taxes, etc, etc, etc
veni bibi saltavi
Nagy Vilmos wrote:
2080 hours in a year
1960 working hours in a year (10 federal holidays)
1920 working hours if you take two weeks vacationSo 10 days federal holiday equals = -120 hrs - Which suggests a 60 hr week And then 2 week vacation (10 days) = -40 hrs - Which suggests a 20 hr week. :confused:
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pwasser wrote:
I don't know about you specifically but it usually indicates the questioner is not cut out for contracting.
Or is new to it, and smart enough to ask questions in a place where there are thousands of people with the knowledge to answer them.
I wanna be a eunuchs developer! Pass me a bread knife!
Agreed. Quite derogatory. Same job, different way of getting paid. Although one tends to move around a bit more.
Regards, Rob Philpott.
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This is not my original work, I can't remember which CPian gave it to me, but:
Quote:
Start with the number of hours you work in a year - 2080 hours in a year 1960 working hours in a year (10 federal holidays) 1920 working hours if you take two weeks vacation For multi-year contract (3+ assume no risk) for all others risk = 1 month + 40 hours for every month under 6 months. (Time to look) 1760 working hours available for 6 month contract Find annual salary you want: $50k Find cost of health insurance, etc $5k (just for giggles) $55k/1760 = $31.25 Now that is gross, so you need to take into account taxes, etc, etc, etc
veni bibi saltavi
Sounds like a cut down version of what @Ennis-Ray-Lynch-Jr [^] used to recommend whenever the question was asked. At one point he also had a calculator to help in factoring in how much more you should ask to cover the inevitable downtime between contracts; but a quick search failed to find it.
Did you ever see history portrayed as an old man with a wise brow and pulseless heart, waging all things in the balance of reason? Is not rather the genius of history like an eternal, imploring maiden, full of fire, with a burning heart and flaming soul, humanly warm and humanly beautiful? --Zachris Topelius Training a telescope on one’s own belly button will only reveal lint. You like that? You go right on staring at it. I prefer looking at galaxies. -- Sarah Hoyt
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Sounds like a cut down version of what @Ennis-Ray-Lynch-Jr [^] used to recommend whenever the question was asked. At one point he also had a calculator to help in factoring in how much more you should ask to cover the inevitable downtime between contracts; but a quick search failed to find it.
Did you ever see history portrayed as an old man with a wise brow and pulseless heart, waging all things in the balance of reason? Is not rather the genius of history like an eternal, imploring maiden, full of fire, with a burning heart and flaming soul, humanly warm and humanly beautiful? --Zachris Topelius Training a telescope on one’s own belly button will only reveal lint. You like that? You go right on staring at it. I prefer looking at galaxies. -- Sarah Hoyt
It was Ennis and I apologise for forgetting and giving credit.
veni bibi saltavi
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Nagy Vilmos wrote:
2080 hours in a year
1960 working hours in a year (10 federal holidays)
1920 working hours if you take two weeks vacationSo 10 days federal holiday equals = -120 hrs - Which suggests a 60 hr week And then 2 week vacation (10 days) = -40 hrs - Which suggests a 20 hr week. :confused:
cut and paste are hard!
veni bibi saltavi
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I am returning to contract programming after a long time. Forgive my ignorance in this matter. Trying to Google the answer really confused me further. Is there a good rule of thumb to determine at what point does dollars per hour translate to an annual salary? For example, a 6 month job in California pays $90/hour. The same company is offering a salary of $115K/year with NO benefits (no health insurance nor retirement plan) That part comes out of the pay per year. I am thinking a simple linear chart where if I work a certain time (3.2 months) contracting I will earn more. But I am surely missing something: FICA is twice the amount, instability of hours, no vacation time, do I need workmen's comp in CA? I seriously doubt if the company will fold over tomorrow, but it could happen too. Could one of the contractor folks point me in the right direction? I would really appreciate the input. Sincerely
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I am returning to contract programming after a long time. Forgive my ignorance in this matter. Trying to Google the answer really confused me further. Is there a good rule of thumb to determine at what point does dollars per hour translate to an annual salary? For example, a 6 month job in California pays $90/hour. The same company is offering a salary of $115K/year with NO benefits (no health insurance nor retirement plan) That part comes out of the pay per year. I am thinking a simple linear chart where if I work a certain time (3.2 months) contracting I will earn more. But I am surely missing something: FICA is twice the amount, instability of hours, no vacation time, do I need workmen's comp in CA? I seriously doubt if the company will fold over tomorrow, but it could happen too. Could one of the contractor folks point me in the right direction? I would really appreciate the input. Sincerely
I've had to do the same calculations. Of course your results will vary, but maybe this will help: I take 5 weeks vacation. No sick/personal time allowed. Add in 7 holidays and that's 32 days per year. This means with contract I'll just get paid for (5 * 52) - 32 = 228 days. 228 days * 8 hours * $90 = $164160 annually. Now, I would have to pay about 9% in social security, medicare, and unemployment tax separate from what an employee pays (as a contractor). Next, I'd lose a 3% contribution towards a 401k plan. That brings it down to $144460. From here, remove any annual bonuses. Then remove medical/dental/vision benefits. For me that would take it down to about $135k. So contracting is better in this case using my numbers. It's possible you'll find that there's no clear winner. It comes down to personal preference much of the time.
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I am returning to contract programming after a long time. Forgive my ignorance in this matter. Trying to Google the answer really confused me further. Is there a good rule of thumb to determine at what point does dollars per hour translate to an annual salary? For example, a 6 month job in California pays $90/hour. The same company is offering a salary of $115K/year with NO benefits (no health insurance nor retirement plan) That part comes out of the pay per year. I am thinking a simple linear chart where if I work a certain time (3.2 months) contracting I will earn more. But I am surely missing something: FICA is twice the amount, instability of hours, no vacation time, do I need workmen's comp in CA? I seriously doubt if the company will fold over tomorrow, but it could happen too. Could one of the contractor folks point me in the right direction? I would really appreciate the input. Sincerely
You aren’t going to find a chart on this subject, but I would not choose to be a contractor for just the money; that is short-sided thinking. I see a contractor as someone who has an advantage over typical employees and make more money with no benefits. Also, contractors don’t get stuck in the same place for their whole career; they can spread their wings and grow. If that is your passion, then go for it. To answer your financial question, my suggestion would be to either write a program or create a spreadsheet and take comparable salaries, benefits (medical, life, and 401k), raises, and inflation and determine how much you’d make. This is over your lifetime, not 6 months or 1 year. I have done this for my life and decided contract work would not be feasible after 35 years old. Unless you are a superstar contractor; you’d better expect to be working at Lowe's when you’re over 55 because I just don’t see many older contractors.
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I am returning to contract programming after a long time. Forgive my ignorance in this matter. Trying to Google the answer really confused me further. Is there a good rule of thumb to determine at what point does dollars per hour translate to an annual salary? For example, a 6 month job in California pays $90/hour. The same company is offering a salary of $115K/year with NO benefits (no health insurance nor retirement plan) That part comes out of the pay per year. I am thinking a simple linear chart where if I work a certain time (3.2 months) contracting I will earn more. But I am surely missing something: FICA is twice the amount, instability of hours, no vacation time, do I need workmen's comp in CA? I seriously doubt if the company will fold over tomorrow, but it could happen too. Could one of the contractor folks point me in the right direction? I would really appreciate the input. Sincerely
I've always used 2048 hours per year. It's not exact, but is close enough.
"One man's wage rise is another man's price increase." - Harold Wilson
"Fireproof doesn't mean the fire will never come. It means when the fire comes that you will be able to withstand it." - Michael Simmons
"You can easily judge the character of a man by how he treats those who can do nothing for him." - James D. Miles
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I've always used 2048 hours per year. It's not exact, but is close enough.
"One man's wage rise is another man's price increase." - Harold Wilson
"Fireproof doesn't mean the fire will never come. It means when the fire comes that you will be able to withstand it." - Michael Simmons
"You can easily judge the character of a man by how he treats those who can do nothing for him." - James D. Miles
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I am returning to contract programming after a long time. Forgive my ignorance in this matter. Trying to Google the answer really confused me further. Is there a good rule of thumb to determine at what point does dollars per hour translate to an annual salary? For example, a 6 month job in California pays $90/hour. The same company is offering a salary of $115K/year with NO benefits (no health insurance nor retirement plan) That part comes out of the pay per year. I am thinking a simple linear chart where if I work a certain time (3.2 months) contracting I will earn more. But I am surely missing something: FICA is twice the amount, instability of hours, no vacation time, do I need workmen's comp in CA? I seriously doubt if the company will fold over tomorrow, but it could happen too. Could one of the contractor folks point me in the right direction? I would really appreciate the input. Sincerely
pfsWrite! Oh how I remember that one. Go for the contract. You cant buy priceless autonomy.
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I've had to do the same calculations. Of course your results will vary, but maybe this will help: I take 5 weeks vacation. No sick/personal time allowed. Add in 7 holidays and that's 32 days per year. This means with contract I'll just get paid for (5 * 52) - 32 = 228 days. 228 days * 8 hours * $90 = $164160 annually. Now, I would have to pay about 9% in social security, medicare, and unemployment tax separate from what an employee pays (as a contractor). Next, I'd lose a 3% contribution towards a 401k plan. That brings it down to $144460. From here, remove any annual bonuses. Then remove medical/dental/vision benefits. For me that would take it down to about $135k. So contracting is better in this case using my numbers. It's possible you'll find that there's no clear winner. It comes down to personal preference much of the time.
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You aren’t going to find a chart on this subject, but I would not choose to be a contractor for just the money; that is short-sided thinking. I see a contractor as someone who has an advantage over typical employees and make more money with no benefits. Also, contractors don’t get stuck in the same place for their whole career; they can spread their wings and grow. If that is your passion, then go for it. To answer your financial question, my suggestion would be to either write a program or create a spreadsheet and take comparable salaries, benefits (medical, life, and 401k), raises, and inflation and determine how much you’d make. This is over your lifetime, not 6 months or 1 year. I have done this for my life and decided contract work would not be feasible after 35 years old. Unless you are a superstar contractor; you’d better expect to be working at Lowe's when you’re over 55 because I just don’t see many older contractors.
Maybe you are used to have companies that actually PAY contractors. In Italy the payment is usually after 60 or 90 or 180 days from the receipt and normally companies simply won't pay. Add the fact that autonomous job has an overall fiscal pressure of about 70% and... well I'd never choose contract work here. It is assured slavery and doom (not the one from ID software though).
Geek code v 3.12 GCS d--- s-/++ a- C++++ U+++ P- L- E-- W++ N++ o+ K- w+++ O? M-- V? PS+ PE- Y+ PGP t++ 5? X R++ tv-- b+ DI+++ D++ G e++>+++ h--- r++>+++ y+++* Weapons extension: ma- k++ F+2 X
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Nagy Vilmos wrote:
2080 hours in a year
1960 working hours in a year (10 federal holidays)
1920 working hours if you take two weeks vacationSo 10 days federal holiday equals = -120 hrs - Which suggests a 60 hr week And then 2 week vacation (10 days) = -40 hrs - Which suggests a 20 hr week. :confused:
P0mpey3 wrote:
So 10 days federal holiday equals = -120 hrs - Which suggests a 60 hr week
And then 2 week vacation (10 days) = -40 hrs - Which suggests a 20 hr week. :confused:You math is seriously whacked. Holidays: 10 * 8 = 80, NOT 120. Vacation: 2 weeks of vacation is 10 days. Again 10 * 8 = 80. Most companies (in the US) allow 15 days of "PTO" (personal time off) to use as you wish (vacation and sick time). This means the "Vacation" category should actually be 15 * 8 (which is 120 hours). so when you take the 2080 value, and subtract 200 hours, you end up with a total of 1880 actual work hours, if the company you work for honors all federal holidays, and most companies only have 8 holidays (for instance, MLK day is generally not recognized as a holiday by civilian companies). Of course none of this matters - at all.
".45 ACP - because shooting twice is just silly" - JSOP, 2010
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You can never have too much ammo - unless you're swimming, or on fire. - JSOP, 2010
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When you pry the gun from my cold dead hands, be careful - the barrel will be very hot. - JSOP, 2013 -
P0mpey3 wrote:
So 10 days federal holiday equals = -120 hrs - Which suggests a 60 hr week
And then 2 week vacation (10 days) = -40 hrs - Which suggests a 20 hr week. :confused:You math is seriously whacked. Holidays: 10 * 8 = 80, NOT 120. Vacation: 2 weeks of vacation is 10 days. Again 10 * 8 = 80. Most companies (in the US) allow 15 days of "PTO" (personal time off) to use as you wish (vacation and sick time). This means the "Vacation" category should actually be 15 * 8 (which is 120 hours). so when you take the 2080 value, and subtract 200 hours, you end up with a total of 1880 actual work hours, if the company you work for honors all federal holidays, and most companies only have 8 holidays (for instance, MLK day is generally not recognized as a holiday by civilian companies). Of course none of this matters - at all.
".45 ACP - because shooting twice is just silly" - JSOP, 2010
-----
You can never have too much ammo - unless you're swimming, or on fire. - JSOP, 2010
-----
When you pry the gun from my cold dead hands, be careful - the barrel will be very hot. - JSOP, 2013 -
I am returning to contract programming after a long time. Forgive my ignorance in this matter. Trying to Google the answer really confused me further. Is there a good rule of thumb to determine at what point does dollars per hour translate to an annual salary? For example, a 6 month job in California pays $90/hour. The same company is offering a salary of $115K/year with NO benefits (no health insurance nor retirement plan) That part comes out of the pay per year. I am thinking a simple linear chart where if I work a certain time (3.2 months) contracting I will earn more. But I am surely missing something: FICA is twice the amount, instability of hours, no vacation time, do I need workmen's comp in CA? I seriously doubt if the company will fold over tomorrow, but it could happen too. Could one of the contractor folks point me in the right direction? I would really appreciate the input. Sincerely
If you are contracting through an agency, the agency will take care of taxes. If not, find yourself a good accountant. The annual salary takes into consideration FUTA, local unemployment and a few other fringe taxes the employer pays for which, as an independent contractor, you are stuck paying. Is your contracting rate inclusive of sales tax? This is sometimes a pain in accounting as your invoices need to carry sales tax as a separate line item and you need to report this to the appropriate tax agency. Failure to do so can bring substantial penalties.
The difficult may take time, the impossible a little longer.
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I am returning to contract programming after a long time. Forgive my ignorance in this matter. Trying to Google the answer really confused me further. Is there a good rule of thumb to determine at what point does dollars per hour translate to an annual salary? For example, a 6 month job in California pays $90/hour. The same company is offering a salary of $115K/year with NO benefits (no health insurance nor retirement plan) That part comes out of the pay per year. I am thinking a simple linear chart where if I work a certain time (3.2 months) contracting I will earn more. But I am surely missing something: FICA is twice the amount, instability of hours, no vacation time, do I need workmen's comp in CA? I seriously doubt if the company will fold over tomorrow, but it could happen too. Could one of the contractor folks point me in the right direction? I would really appreciate the input. Sincerely
By my calculations, a $90 an hour job would bring you home approximately $112,000 after taxes, health insurance, and other deductions (depending upon where you live) if was extended out for the year. The $115,000 would put about $69,000 in your pocket if you got your own health insurance, etc. I use 60% as a general rule for what I put in my pocket from gross after deductions for taxes and the like. Keep in mind that the employer matches what you put in FICA. From the looks of it, you might put as much in your pocket in 6 months as you would working for them for a year.
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I've always used 2048 hours per year. It's not exact, but is close enough.
"One man's wage rise is another man's price increase." - Harold Wilson
"Fireproof doesn't mean the fire will never come. It means when the fire comes that you will be able to withstand it." - Michael Simmons
"You can easily judge the character of a man by how he treats those who can do nothing for him." - James D. Miles
wow man, where do you get that form? here in the uk, we get minimum 20 + 8 days off. hear is how I got it to 1635 hours per year... (7.5 hour working days, we don't get paid for lunch hour :( ) Days in year 365 Bank Holidays, xmass etc. 8 Weekend days (52*2) 104 Full Paid Holidays 31 Full Paid Sick Days 4 Days actually working 218 Hours working 1635
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I am returning to contract programming after a long time. Forgive my ignorance in this matter. Trying to Google the answer really confused me further. Is there a good rule of thumb to determine at what point does dollars per hour translate to an annual salary? For example, a 6 month job in California pays $90/hour. The same company is offering a salary of $115K/year with NO benefits (no health insurance nor retirement plan) That part comes out of the pay per year. I am thinking a simple linear chart where if I work a certain time (3.2 months) contracting I will earn more. But I am surely missing something: FICA is twice the amount, instability of hours, no vacation time, do I need workmen's comp in CA? I seriously doubt if the company will fold over tomorrow, but it could happen too. Could one of the contractor folks point me in the right direction? I would really appreciate the input. Sincerely
As someone who lives this way, the rule of thumb is 3x. Take the rough salary ($90K/yr -> $45/hr (dividing by 2,000 is easiest)). Charge Triple that -> $135/hr (Roughly. Could be $125 - $150). The 3x is explained as: 1 for the Developer 1 for the Overhead (Your PC, Dev Tools, Paid Leave, Extra Taxes, Insurance, Lunches/Dinners) 1 for the Profit (This is the more "elastic" of the 3, but sets a strict limit on how low you go) So, now that you see where the number is derived. You could easily accept $90/hr. And realize you will have no "profit" in your business. At least at $100/hr, you know you have a 10% profit. I also suggest you setup a company, and use ONE Specific Credit Card for all expenses (and only legitimate expenses) for your business. Pay yourself as an employee from day one. Do NOT live off of the money that comes in (you may find yourself with a $50K tax bill due next year). I use an AmEx. The best $75/yr I spend. My account grabs the year end summary and does NOT waste his time going through all of my little receipts. (The one downside to AmEx is that about 3-5 times a year, I end up having to use a Visa to charge something at some backwoods place that doesnt take AmEx, so your mileage may vary) == Start with that. Then, shorter term work requires a Higher Profit Margin... Longer term work justifies being more flexible. Over a decade at this, and I wish I would have done it this way, DAY 1... HTH, Kirk Out! PS: Also buy a mileage tracker for your vehicle. Another thing I did not do well my first year or two. Over 50% of my mileage is business, so it pays for itself quickly.
