How to determine your contract pay rate

Considering a contract position, but aren't sure what your hourly rate should be? Determining the right rate is essential lest you lose thousands due to significantly higher taxes, benefits costs and other expenses.

In general, plan on charging between 25%-30% more than your employee going rate as a contractor, but consider the many factors included in these online calculators and articles below to ensure that you receive the equivalent compensation of a regular employee.

• Contract pay calculator (Rakkar) 
• Converting full time pay to hourly contract rate (Hueniverse) 
• Hourly wage calculator (Career Profiles)
• Doing the math on being a W2 employee vs. an independent contractor (LinkedIn)
• How much should contractors charge? (Monster)
• Employee vs. contractor: A tax distinction (Bankrate)

Once you have estimated your going rate as a contractor, run it by an accountant or financial planner to ensure that you've thought of every financial and tax consequence.

WARNING! Don't be fooled by seemingly large contractor paychecks! About half of your paycheck should be saved to cover higher taxes.

Being a contract employee can be lucrative, but do your homework, negotiate well and save ruthlessly! -- Kathy


RELATED ARTICLES: Should you be a contract employee?

• Being a consultant, freelancer or contractor (Nolo)
• Should I be a contract worker or a permanent employee? (Ashley Ellis)

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