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Here's how I do that: Take your hourly rate and multiply it by 2,080, which is the number of hours in a year if you work 40 hours a week for 52 weeks. Or if you need to convert a salary into an hourly wage, you can divide the salary by 2,080. That way, you can compare the salary for each role to each other role.
Add the hourly salary amount to the hourly benefit amount for the hired worker. Multiply the total hourly rate by the number of estimated hours you expect the contractor to work to calculate a salary suitable for offer.
Add your chosen salary and overhead costs together. Multiply this total by your profit margin. Divide the total by your annual billable hours to arrive at your hourly rate: $99,000 ÷ 1,920 = $51.56. Finally, multiply your hourly rate by 8 to reach your day rate.
The contract employee is paid by a check or direct deposit. He receives a Form 1099 from each client at the end of the year to account for his earnings, unless a company paid him $600 or less for the year. In most cases, the contract employee has no benefits, no taxes and no withholdings kept from his pay.
Contractors earn more money than employees do. It's that simple. That is because contractors charge more and can take home a lot more of their pay than employees are able to. Contractors have three major advantages: they typically charge more, they pay less in taxes, and they can deduct their expenses.
The rough formula I have seen here is to multiply daily rate by 100 to get to approx annual salary. Might be a little high or low in some cases but as a rough rule of thumb. The rough formula I have seen here is to multiply daily rate by 100 to get to approx annual salary.
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To leave a full-time job to take a contract you should get a minimum of 50% more than your current hourly rate, considering the number of hours you are actually working. Hint: it's probably considerably less than 2000 hours per year. The recruiters will tell you that a $60/hour contract is equal to $120,000/year.
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