W2 Hourly Vs C2C? - Consultant - Ask MetaFilter

W2 Hourly vs C2C? May 9, 2022 2:55 PM Subscribe I'm in a bit of a time crunch. I'm trying to figure out my C2C hourly or W2 hourly rates. Neither include benefits or paid vacation. The rate difference is 11% less W2. Second I currently do not have an LLC, but I was told I could bill in my own name until that is setup (sole proprietorship). I realize my liability is less with an LLC but I cannot imagine that being an issue. You are not my accountant, etc. posted by geoff. to Work & Money (9 answers total) Response by poster: I should add that I didn't add deductions, I assume I could deduct C2C my laptop, monitor, home office (I'm remote), phone maybe portions of my internet?posted by geoff. at 3:24 PM on May 9, 2022 A rule of thumb I was taught (about 30 years ago) for contracting (in the software industry) was to take your yearly W2 salary, divide by 1000, and that is your hourly rate. E.g. $70k/year on W2 is equivalent to about $70/hour as a contractor. You might say "But wait, there are about 2000 work hours in the year, so you are doubling your compensation, and contractors get all sorts of juicy tax benefits!" It's true, but... * contractors pay their own social security (7.5%) * contractors often get no benefits or paid time off * contractors have various forms of overhead * W2 employees often get paid for 2000 hours even if there's not much to do; contractors often get their hours cut or laid off when the project is over.posted by soylent00FF00 at 3:28 PM on May 9, 2022 [2 favorites] Response by poster: So to be clear it is W2 hourly. The offer is the same (no benefits, hourly) they're just giving me the option. I'm a contractor regardless.posted by geoff. at 3:47 PM on May 9, 2022 If I were debating between a W2 or 1099 position (I'm not sure what C2C is), you should expect that the 1099 position would pay roughly double the hourly rate as the W2. This additional money is meant to cover the things that soylent mentions above. Your tax 'benefits' may be eaten up by additional accounting fees come tax-time. You'll get deductions, but you'll also have to track and depreciate office items. For simplicity, if you don't want to deal with that, or don't expect to work other jobs while you're also doing this job, then I'd probably take the W2 position.posted by hydra77 at 3:49 PM on May 9, 2022 I'm a contractor regardless. This doesn't pass the smell test. Not a tax lawyer, but what state do you live in? Being a contractor is not an option of convenience. It's very serious. So serious, that in Califorina, it's been named the ABC Test (seriously, don't fuck with the IRS or state-level employment agencies)posted by soylent00FF00 at 4:04 PM on May 9, 2022 [8 favorites] Will you be able to apply for unemployment if/when the W-2 position is terminated? That might be another benefit beyond the company paying their portion of basic taxes.posted by rrrrrrrrrt at 10:44 PM on May 9, 2022 Could you use TurboTax or maybe a free online tool to do dummy tax returns with your income as W2 and 1099 and see how it looks for your particular situation? I think there may be too many variables for anyone to know if the 11% bump for 1099 means that you come out ahead or not - it seems to me you need to plug in stuff like the deductions you expect, the earnings you expect, etc.posted by Mid at 6:42 AM on May 10, 2022 When I became a consultant, I thought I was going to need an LLC. I went to a lawyer who said "I'd like to take your money but an LLC won't protect you, because anyone suing you will sue both the LLC _and_ you personally". I ended up not being a sole proprietor either - my consulting was with a state government which had "term contracts" with companies that provided workers at pre-negotiated rates, so I ended up being employed through one of those arrangements, and that company did the 1099s etc. - I had basically no paperwork to worry about other than recording hoursposted by TimHare at 10:42 AM on May 10, 2022 I think maybe C2C means corporation to corporation? In that case, if it means what I think, you will either be the employee of the hiring organziation or an employee of a corporate that provides contract employees. (similar to timhare's position above) If that is the case, you would have to compare the benefits etc. of the corporate that you would actually be hired by to that of the primary employer (usually worse but that's just guessing). Both cases you would be a W2 employee, just a different employer.posted by metahawk at 1:09 PM on May 10, 2022 « Older Adderall, BO and Autism | Help understanding my sudden acid reflux Newer » This thread is closed to new comments. Related Questions Halp me vet the stipulations in my long-term work... February 3, 2020 I haven’t filed my taxes for an obscenely long time September 12, 2018 Help me undersand taxes. Where did my refund go? February 22, 2014 Do I send my real W2 to a tax accountant? April 30, 2013 A little 1099, a little W2. How do I file? January 22, 2010

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