Re: Contractor pay (was: Tech Writers as Hourly Employees?!)

[HBacheler -at- aol -dot- com]

To All.
Here are some factors you can agree  with, or not.

An Independent Contractor is a 'Small  Business'.

NOTE: BEFORE YOU TAKE THIS INFORMATION AS ACCURATE, CONTACT  YOUR LAWYER, 
ACCOUNTANT, TAX ADVISOR  (Income Tax, Social  Security).

Figures ARE ESTIMATES ONLY.

Gross hours available =  2080

1720 hours of work (paid)
360 hours - Marketing (looking  for new business), sick, family business, 
vacation (unpaid)

2080  hours


Independent Contractor -  Pays all of the 15 percent FICA  (Social Security)
(I don't know what the medicare 'contribution'  is)

This EXAMPLE is figured as if you were in the 20 per cent income  bracket

Salary equal $25.00 per hour times 1720 equals  $43,000.00
Taxes equal  $43,000.00 times 20 percent equals  $8,600.00
Social Security equals $43,000.00 times 15 percent equals  $6,450.00

Don't forget your State Income Tax

I don't think I need  to go any further in the example as the TAX shown above 
is at 35 percent of your  'earnings'.



In all of the books on consulting that I have read,  it is recommended that 
you use the rule of 3 as an initial formula for your  business.  It is figured 
this way, as you have to 'pay' for all of  it.

1)  Salary - 35 percent
2)  Benefits - 30  percent
3)  Expenses - 35 percent
Total = 100 percent

Thus,  for each hour worked:  

Salary        at $35.00 hour
Benefits    at $30.00 hour
Expenses at  $35.00 hour

Equals billing rate of $100 per hour

I know that some  of the companies that had me on a government contract were 
charging upwards of  $130.00 per hour.

When I worked at a company in the late 70's, I was  'burdened' at 210 percent 
of my 'salary plus benefits'.

You determine  your rate of income.

Herman Holtz, a consultant in Maryland has written a  number of books on how 
to figure your rate of 'compensation' as a  consultant/contractor.
His books will also refer you to other books that  address rate setting.

Been there, done that, still have the scars to show  for it.

BTW, I have been 1099, invoice, W2 with bennies, and W2 without  bennies.
Learned some of the lessons once, had to learn others  twice.

Hope this helps.
I still have some books that also deal with  this subject matter.

Sincerely,

Harry  


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