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.
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A
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B
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C
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D
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1
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Annual
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Hourly
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2
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Base
Salary
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$50,000.00
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$50,000.00
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$36.13
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3
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Bonus
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$5,000.00
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$5,000.00
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$3.61
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4
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Insurance
per Month
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$70.00
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$840.00
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$0.61
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5
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401K
Amount
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5.00%
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$2,500.00
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6
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401K
match %
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50.00%
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$1,250.00
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$0.90
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7
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FICA
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$3,750.00
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$2.71
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8
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9
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Days
Vacation
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15
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10
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Holidays
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12
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11
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Unemployment
(weeks)
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12
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12
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13
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Total
Compensation
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$60,840.00
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$43.96
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14
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Hourly
Rate
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$43.96
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15
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16
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Total
Working Hours
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1384
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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.
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1
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2
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Base
Salary
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Is
the base salary for the comparable position. In this example
we used $50,000.00
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3
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Bonus
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Is
the bonus associated with the comparable position. In this
example we used $5,000.00
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4
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Insurance
per Month
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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.
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5
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401K
Amount
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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%.
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6
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401K
match %
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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.
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7
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FICA
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is
the additional FICA that must be paid by the member (7.5
% of base pay).
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8
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9
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Days
Vacation
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is
the number of days vacation normally granted to the member.
(Decreases the number of working hours to make the total
payments).
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10
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Holidays
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is
the number of holidays normally granted to the member (Decreases
the number of working hours to make the total payment).
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11
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Unemployment
(weeks)
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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.
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12
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13
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Total
Compensation
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Is
the total equivalent compensation you will need to make.
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14
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Hourly
Rate
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Is
the total compensation divided by the number of hours available
for work.
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15
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16
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Total
Working Hours
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Is
the number of available working hours based on vacation,
holidays and unemployment.
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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.
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