A(z) Contractor vs Employee Cost kiszámítása

Mi az a Contractor vs Employee Cost?

The Contractor vs Employee Cost Calculator compares the total cost to a business of hiring a 1099 independent contractor versus a W-2 employee for the same role, including taxes, benefits, overhead, and management costs.

Képlet

Sw2

W-2 Annual Salary ($/year) — Base salary for the W-2 employee

Lf

Loading Factor (%) — Benefits and employer taxes as percentage of salary (typically 25-40%)

Rc

Contractor Rate ($/hour) — Hourly rate for the 1099 independent contractor

H

Estimated Hours (hours) — Expected total hours of contractor engagement

Útmutató lépésről lépésre

1. 1Enter the W-2 salary and benefits package (health insurance, retirement match, PTO value)
2. 2Input the equivalent 1099 contractor hourly or project rate
3. 3Add employer payroll taxes (7.65% FICA + FUTA + state unemployment)
4. 4Compare total loaded cost for each arrangement including overhead and management

Worked Examples

Common Mistakes to Avoid

• ✕Comparing contractor rate to employee salary directly without adding the 25-40% benefits and tax burden on W-2 employees
• ✕Forgetting worker classification rules — the IRS can reclassify 1099 contractors as employees with significant penalties if the relationship meets employment criteria
• ✕Not accounting for the cost of contractor management, onboarding, and knowledge loss at project end

Frequently Asked Questions