employment

1099 CALCULATOR

OK, so you've been working as a salaried employee for XYZ company and now decide to work as a 1099 contractor. How do you determine a fair rate? What would you have to charge to make what you made with XYZ company. This spreadsheet will help you answer these questions. You will have to cover you own vacation, health care, retirement, and the other half of your FICA and Medicare. Also, if you can't find work, you will not be eligible for employment security. The spreadsheet addresses all these issues.

A

B

C

D

1

Annual

Hourly

2

Base Salary

$50,000.00

$50,000.00

$36.13

3

Bonus

$5,000.00

$5,000.00

$3.61

4

Insurance per Month

$70.00

$840.00

$0.61

5

401K Amount

5.00%

$2,500.00

6

401K match %

50.00%

$1,250.00

$0.90

7

FICA

$3,750.00

$2.71

8

9

Days Vacation

15

10

Holidays

12

11

Unemployment (weeks)

12

12

13

Total Compensation

$60,840.00

$43.96

14

Hourly Rate

$43.96

15

16

Total Working Hours

1384

This spreadsheet is set up to calculate the equivalent hourly rate for a 1099 contractor who is used to working in a salaried environment with benefits.

The following table describes the function of each row.

1

2

Base Salary

Is the base salary for the comparable position. In this example we used $50,000.00

3

Bonus

Is the bonus associated with the comparable position. In this example we used $5,000.00

4

Insurance per Month

Is the amount extra needed to cover medical insurances. In this example, the contractor is paying a spouse to be second on the spouse’s policy at $70.00 per month.

5

401K Amount

is the percentage of the total base salary that you would expect an employer to match for a 401K plan. In this example it is 5%.

6

401K match %

is the rate at which the previous employer matched member contributions to the 401K. In this example, the employer contributes 50% for every dollar you contribute to a maximum of 5% of the base salary.

7

FICA

is the additional FICA that must be paid by the member (7.5 % of base pay).

8

9

Days Vacation

is the number of days vacation normally granted to the member. (Decreases the number of working hours to make the total payments).

10

Holidays

is the number of holidays normally granted to the member (Decreases the number of working hours to make the total payment).

11

Unemployment (weeks)

is the expected unemployment expressed in weeks. If it is a long-term contract, this can be zero. If the contract is short-term then you need to estimate how many weeks it will take you to find new work.

12

13

Total Compensation

Is the total equivalent compensation you will need to make.

14

Hourly Rate

Is the total compensation divided by the number of hours available for work.

15

16

Total Working Hours

Is the number of available working hours based on vacation, holidays and unemployment.

So, in the example provided, the contractor should be working at approximately $45.00 per hour to make the equivalent of $50K + 10% bonus.

To download the spreadsheet, click here.