How to determine contractor hourly rate and employee salary equivalents?
Here are a few points to consider: Taxes: As a consultant, you will be responsible for the employer portion of the Social Security and Medicare taxes, and you might have to pay for state unemployment insurance and state disability insurance, as well. Office expenses: As a consultant, you may be required to buy your own laptop, pay for your own software licenses and buy other office-related supplies. For higher-end services, you may be setting up a complete office and even hire your own secretary and other support staff. Benefits: As a consultant, you will be responsible for your own health insurance, retirement plan and other benefits that an employer would ordinarily provide. Education: Your employer will likely pay for books and magazine subscriptions and send you to seminars, in order to keep your skills current; your client won't. Liability: Consultants face certain liabilities that employees don't, and have to factor the cost of insuring against those risks into their rate. Let's say you're a software developer, and your faulty code causes a nuclear plant's reactor core to overheat and melt down. As an employee, you'll get fired. As a consultant, you will get sued. Even consultants in low-risk fields can easily shell out thousands of dollars per year for a basic general liability policy. Sales & marketing: Don't forget that when your contract ends, you will have expenses associated with finding your next client, including the opportunity cost of not getting paid for your services during that time. All these factors contribute to your overhead, which you have to roll into your consulting rate. You should also add a margin of profit -- after all, as you're in business for yourself, you should be compensated for taking this entrepreneurial risk.   If you're looking for a quick over-the-thumb rule, you can figure that your equivalent consulting rate should be about twice what you would be paid hourly as an employee. Assuming you work 2,000 hours a year, if you would receive a $100,000 salary, your hourly rate should be $100. Of course, this is only a very rough guideline. Ultimately, your rate will mostly be influenced by how established you are and how much your services are in demand. Take $100,000 base salary, x 1.5 = $150,000 contractor salary, divide by 1,872 hours = $80/hr
"&gt; love how you're walking back toward the positions I've taken previously,  I was about to say the same about you, when you agreed that Susan is not good at anything and got her job due to her connections and not because of, or despite of her educational background and degrees.  &gt; you said you would not consider someone with a music or communications undergrad degree for a security position, full stop. Diversity hire?   Yes. I will not hire Music people for Security jobs unless they have proven experience and I would definitely hire former soldiers and IT graduates with zero experience over a music major for a security job, because ""diversity"" is not even a factor and should not be a factor in choosing the best for the job.   &gt; their [HR] role is to hire the best talent and protect the company, not to protect employees,  Correction: HR role and actions is to hire the cheapest employees, even employ freelancers, contractors and outsource. They will never pay for good talent but they sure will offer a fat salary for the cousin of the CEO's tennis trainer.   You are 100% correct when you said that HR does not protect of even on the side of the employee.  P/S: the HR department at my firm is using contractors and temps for various tasks. They have a huge turn over of employees and were rank one of the lowest in the company's ""employee engagement"" survey... like HR department is most companies. What a great image this gives to the rest of the employees in the company." Happened to my girlfriend at a non-profit that had really generous maternity leave. She had been in a manager-esque position there for something like 5 years at that point and had been far too generous with her commitment for being an hourly employee. She really wasn't a manager but she picked up the slack for other people and was generally considered second-in-command. Boss leaves for another opportunity, recommends her for his job - she thinks she is set. Instead, they hire someone outside on who only has slightly more experience.   The day the new girl starts, she tells them she is pregnant. She works for literally a week before going on maternity leave for six months. Meanwhile, my gf has already been taking over all management duties as an hourly employee with no pay improvement for the six months to fill the position and now has to do the same work for six more months, no increased compensation, no salary. I told her to straight up quit and leave them in a bind. The short answer is no you can only deduct actual expenses. The long answer is that it would be impossible for the IRS to determine the value of your time and it would open the tax system to an enormous amount of fraud (think of being able to make up time spent or writing off time spent volunteering at a soup kitchen or any other charity). Now you can write off expenses you have involved in doing the work, equipment and supplies used to do the work along with any wages you paid an employee or contractor to do said work. "Some of the 45,000 might be taxable. The question is how was the stipend determined. Was it based on the days away? The mile driven? The cities you worked in? The IRS has guidelines regarding what is taxable in  IRS Pub 15 Per diem or other fixed allowance.  You may reimburse your employees by travel days, miles, or some other   fixed allowance under the applicable revenue procedure. In these   cases, your employee is considered to have accounted to you if your   reimbursement doesn't exceed rates established by the Federal   Government. The 2015 standard mileage rate for auto expenses was 57.5   cents per mile. The rate for 2016 is 54 cents per mile. The government per diem rates for meals and lodging in the continental   United States can be found by visiting the U.S. General Services   Administration website at www.GSA.gov and entering ""per diem rates"" in   the search box. Other than the amount of these expenses, your   employees' business expenses must be substantiated (for example, the   business purpose of the travel or the number of business miles   driven). For information on substantiation methods, see Pub. 463. If the per diem or allowance paid exceeds the amounts substantiated,   you must report the excess amount as wages. This excess amount is   subject to income tax with-holding and payment of social security,   Medicare, and FUTA taxes. Show the amount equal to the substantiated   amount (for example, the nontaxable portion) in box 12 of Form W-2   using code “L""" I'm a freelance programmer, reverse-engineer, and network engineer. I do quarterly 1099 filings using a cheap local accounting firm. I did them on my own at first; not that hard.. You deduct from sum the percentage for that earning-tier issued by the IRS.. $500.00 for writing algorithms on a timer? Yikes.. I did topcoder once but it didn't pay much then it was only good for portfolio.. No way I would race to do algorithms for third-world-rate capital.. Biweekly pay for salaried employees is typically calculated as Annual-salary / 26. Twice a month pay for salaried employees is typically calculated as Annual-salary / 24. If you were getting paid twice a month and now are getting paid every other week, your paycheck will be roughly ( Twice-a-month-paycheck-amount * 24 / 26 ).  If you were paid $1000 twice a month, you'll be paid $923 every other week.   $1000 * 24 = $24K and $923 * 26 = $24K.   You will get paid every other week regardless of month boundaries on a biweekly pay cycle. The hours you list are all over the place.  Is it 40 hours/week or 65-80?  You best clarify it during your interviews.   My only tip is familiarize yourself with:   http://gipsstandards.org/   They may not use it, but at least know what the industry standard is. "Since a lot of the companies in your source are public accounting firms, I'm interested in if these salaries are similar to what they (PwC, EY, Deloitte, etc...) pay their entry level accountants? How about entry level advisory accountants? Do their accountant salaries ever approach the level of their ""consultants""?"