I am offerred a contract position.
And they told me that maybe after 2~3 month, they might hire me full time w/ benefits. Of course who knows the future.
So, a contract position with NO benefits at all with NO guarantee of anything. Simply paid by the hour and I am thinking of taking it.
I have four years of experience and do you guys know how much I should ask? They simply offered me an hourly rate based on my previous salary.
(example, $50,000/50weeks/40hours = $25/hour)
You should do more than think about taking it...you should take it. I don't know what city you're in but lets for a minute say its New York (one of the most expensive). Two years ago you should have been making around 60k with 4 years experience. Nowadays I've come across 6 year licensed architects who are willing to work for 45k. You are lucky to have this offer..take it.
I would say to take your salary and add 15% to it.
The reason for the 15% is to make up for things like time off, healthcare, petty cash et cetera that you would be getting as a regular employee.
As a contractor... you will more than likely have to supply your own work-related supplies. Hopefully, they'll let you use their software. But a months worth of paper, printing, sticky notes, notepads and folders is a considerable expense when you're paying for them.
I'd bump it up to $28.75.
A lot of people tend to forget that your salary isn't your real salary. It's salary plus benefits plus extras.
The company I work for... almost all of the employees are contract. We make it perfectly clear if they want to become employees, that $40 an hour they make will become something closer to $18 an hour.
By stipulating what you are and aren't willing to do as a contract employee will show your considerable worth.
Also, there's a lot of accounting and tax reasons as to why you should make this perfectly clear and that boundary clear that you are a contractor and not a contract employee.
If you're outside a right to work state... technically a company can't sign a contract until you've worked 3 months.
Don't forget you have to pay taxes so factor that in (or more like factor that out so you know what you are actually getting). 50k sounds good until you realize it's closer to 40k (or less) after taxes.
Qoute "Also, there's a lot of accounting and tax reasons as to why you should make this perfectly clear and that boundary clear that you are a contractor and not a contract employee." - Orochi
Hi Orochi,
They sent me an email and called me 'contract employee', can you please further advice me of things that I should know?
Meow,
I've worked several contract jobs, and the main thing I concerned myself with was calculating my tax rates (where an employer normally takes care of that). Remember, you have Federal, State, and possibly city taxes, plus Social Security taxes.
Since I don't know what state/city you're in, I can't gauge if 50k is good or not - however, in this current job climate, in most cases that range isn't so bad, for someone with 4 years experience (what is that experience? PM, graphics work, Job Captain?).
Here is something which makes contract work kinda cool... technically, you're your own boss... thus, you are a business. As such, you should treat this job (if you take it) as if this employer is a client... because they are.
Have you created a business? If not, I HIGHLY suggest that you do, because once you create a business, practically everything becomes a write-off come tax time (schedule C 1040). I've had my own practice for many years, even when I worked full time (moonlighting, shhh). Almost everything (save food, personal items) I was able to deduct from the taxes that I owed, on income made from these side projects.
If you set up a business, the general rule is that you should pull aside about 15% of what you make (each paycheck), for taxes. That's less than a standard rate of approx. 25 to 30% if your single and no dependents. You offset the tax rate by using tax deductions.
Save ALL your receipts (or bank statements, showing what you purchased)... you will itemize just about everything you buy, rent, pay for (check IRS for deductions rules).
I also HIGHLY recommend hiring an accountant - the accountant fee is TAX DEDUCTIBLE! You will either owe very little, or possibly get a return, depending on what your deductions add to. I've usually receive a return, or pay very little in taxes. Naturally, that changes as income increases or decreases, and what deductions I list (by the way, health insurance and costs are tax deductible).
Creating a business, and what you can deduct, is a whole other discussion... my point here is, with the extra effort to set up and run this job as a business, you will easily justify your 'contract' status - and if you were planning on becoming your own boss someday anyway, it will put you one step closer to that goal.
I have the same question, did a search, and found this on the web. Hope it helps.
Independent contractor fees. If you work as an independent contractor without going through an agency, you have some leeway in establishing your professional fees, but you should charge close to market. To calculate this rate, start with the prevailing full-time salary for that job. Then divide by 2080, the number of work hours in a year (2080 = 52 X 40). This is the hourly rate for your job if benefits are being paid for by the employer.
But as a contractor, you need to pay for your own benefits, as well as additional Social Security contributions, so the number needs to be higher. Salary.com uses an adjustment factor of 30 percent to convert an hourly wage for a salaried employee to an hourly wage for a contract employee. Multiply your unadjusted hourly rate by (1 + 0.3) to get your adjusted hourly rate. For example, if your unadjusted hourly rate comes out to $20 per hour, your contract rate should be $20 * (1.3) = $26.
An example shows how this works for a senior-level web designer in Kansas City. A Web designer III working in Kansas City makes $66,244. The unadjusted hourly rate for this position is $66,244/2,080, or $31.85. Adjusted by 30 percent, the contract rate comes to $41.40.
Contract fee for a Web designer III in Kansas City
And to answer the question as to what is different between a contractor and a contract employee is this:
A contractor is a person or entity that's contracted for a given amount of money to perform a specific task over a period of time. A contractor is expected to provide and maintain their own necessities that fulfill that contract. They may or may not share a workplace with the contracted (employer) and typically do not fall under the same employment guidelines as would other employees of the employer.
Of course, all of this would be or should be specified in the contract.
A contract employee is essentially a specialized temporary worker. They are contracted to work for a specific time period and are more than likely paid hourly. Unlike regular employees, they are often exempt from particular labor laws (overtime) and should not hold the same expectations that regular employees do.
Contract employees will not receive any extra benefits, perks or excess pay unless stated in the labor contract. Although contract employees share less in terms of employee benefits, it is often harder to terminate them and breach of contract may end in one party or another party compensating for the remainder of the contract.
Side note: this is how temp agencies make ridiculous amounts of money.
Say a standard employee receives $50,000 dollars a year. The total benefits attached to that job can be as high as 55-65%. Employment agencies will charge employers the salary plus the 55% and an additional 35% of the final total. A temp agency employee makes around 30-45% of the total billing of the temp agency and receives very minimal benefits (maybe 15% of total payment).
Regular employee= $50,000 salary, $27,500 benefits and fringe benefits-- total $77,500
Temp Agency Charge= $77,500 plus 35% ($27125)-- total $104,625
Temp Agency Employee= $36,618-- total ~$45775
Regular employee pay per hour= $24.50
Contract employee pay per hour= ~$33.50
Regular employee pay cost to employer per hour= $37.90
Temp Agency charge per hour= ~$51.30
Temp Agency profit per hour= ~$28.85
Temp Worker pay per hour= $17.95
If you are not registered as an Architect in some states it is not allowed to be a contract worker. Just be sure your doing it in a legal fashion, cause it can be a pain for you and the people employing you as a contract worker. I thought this was always a good thing because it forces firms to step up to the plate and deal with everyone as an employee....none of this shit for shineolla.
My understanding is that if you are a contractor, then you use your own tools/materials/space/office. Contract employee, the company equips you with a desk/computer/etc. you will probably make a little bit more hourly, but you don't receive the benefits.
well, in the eyes of the government, it's the same thing. There are no differences... individual firms may make this distinction, and set 'rules' (like set hours for you come in, etc.), but that's an agreement you make at the time of hire. Since you wouldn't be a full on employee, one should make very sure that these understandings are made prior to agreement.
Jan 9, 10 11:06 pm ·
·
Block this user
Are you sure you want to block this user and hide all related comments throughout the site?
Archinect
This is your first comment on Archinect. Your comment will be visible once approved.
Contract position, hourly rate?
I am offerred a contract position.
And they told me that maybe after 2~3 month, they might hire me full time w/ benefits. Of course who knows the future.
So, a contract position with NO benefits at all with NO guarantee of anything. Simply paid by the hour and I am thinking of taking it.
I have four years of experience and do you guys know how much I should ask? They simply offered me an hourly rate based on my previous salary.
(example, $50,000/50weeks/40hours = $25/hour)
Is this an ok offer?
What about location, how far is this job from your home?
I think $25/hr is pretty good for temp job, you can still do job hunting while working there...
You should do more than think about taking it...you should take it. I don't know what city you're in but lets for a minute say its New York (one of the most expensive). Two years ago you should have been making around 60k with 4 years experience. Nowadays I've come across 6 year licensed architects who are willing to work for 45k. You are lucky to have this offer..take it.
I would say to take your salary and add 15% to it.
The reason for the 15% is to make up for things like time off, healthcare, petty cash et cetera that you would be getting as a regular employee.
As a contractor... you will more than likely have to supply your own work-related supplies. Hopefully, they'll let you use their software. But a months worth of paper, printing, sticky notes, notepads and folders is a considerable expense when you're paying for them.
I'd bump it up to $28.75.
A lot of people tend to forget that your salary isn't your real salary. It's salary plus benefits plus extras.
Orochi,
I will be working inside their office. As a contract worker.
But as a contract worker, you're not entitled to the same things as employees.
The company I work for... almost all of the employees are contract. We make it perfectly clear if they want to become employees, that $40 an hour they make will become something closer to $18 an hour.
By stipulating what you are and aren't willing to do as a contract employee will show your considerable worth.
Also, there's a lot of accounting and tax reasons as to why you should make this perfectly clear and that boundary clear that you are a contractor and not a contract employee.
If you're outside a right to work state... technically a company can't sign a contract until you've worked 3 months.
Don't forget you have to pay taxes so factor that in (or more like factor that out so you know what you are actually getting). 50k sounds good until you realize it's closer to 40k (or less) after taxes.
$25 is still pretty decent. Better than $0.
Thank you all.
I will take it and work hard, work hard....
Qoute "Also, there's a lot of accounting and tax reasons as to why you should make this perfectly clear and that boundary clear that you are a contractor and not a contract employee." - Orochi
Hi Orochi,
They sent me an email and called me 'contract employee', can you please further advice me of things that I should know?
Many thanks in advance.
Meow,
I've worked several contract jobs, and the main thing I concerned myself with was calculating my tax rates (where an employer normally takes care of that). Remember, you have Federal, State, and possibly city taxes, plus Social Security taxes.
Since I don't know what state/city you're in, I can't gauge if 50k is good or not - however, in this current job climate, in most cases that range isn't so bad, for someone with 4 years experience (what is that experience? PM, graphics work, Job Captain?).
Here is something which makes contract work kinda cool... technically, you're your own boss... thus, you are a business. As such, you should treat this job (if you take it) as if this employer is a client... because they are.
Have you created a business? If not, I HIGHLY suggest that you do, because once you create a business, practically everything becomes a write-off come tax time (schedule C 1040). I've had my own practice for many years, even when I worked full time (moonlighting, shhh). Almost everything (save food, personal items) I was able to deduct from the taxes that I owed, on income made from these side projects.
If you set up a business, the general rule is that you should pull aside about 15% of what you make (each paycheck), for taxes. That's less than a standard rate of approx. 25 to 30% if your single and no dependents. You offset the tax rate by using tax deductions.
Save ALL your receipts (or bank statements, showing what you purchased)... you will itemize just about everything you buy, rent, pay for (check IRS for deductions rules).
I also HIGHLY recommend hiring an accountant - the accountant fee is TAX DEDUCTIBLE! You will either owe very little, or possibly get a return, depending on what your deductions add to. I've usually receive a return, or pay very little in taxes. Naturally, that changes as income increases or decreases, and what deductions I list (by the way, health insurance and costs are tax deductible).
Creating a business, and what you can deduct, is a whole other discussion... my point here is, with the extra effort to set up and run this job as a business, you will easily justify your 'contract' status - and if you were planning on becoming your own boss someday anyway, it will put you one step closer to that goal.
Good luck, and congrats on the offer!
I have the same question, did a search, and found this on the web. Hope it helps.
Independent contractor fees. If you work as an independent contractor without going through an agency, you have some leeway in establishing your professional fees, but you should charge close to market. To calculate this rate, start with the prevailing full-time salary for that job. Then divide by 2080, the number of work hours in a year (2080 = 52 X 40). This is the hourly rate for your job if benefits are being paid for by the employer.
But as a contractor, you need to pay for your own benefits, as well as additional Social Security contributions, so the number needs to be higher. Salary.com uses an adjustment factor of 30 percent to convert an hourly wage for a salaried employee to an hourly wage for a contract employee. Multiply your unadjusted hourly rate by (1 + 0.3) to get your adjusted hourly rate. For example, if your unadjusted hourly rate comes out to $20 per hour, your contract rate should be $20 * (1.3) = $26.
An example shows how this works for a senior-level web designer in Kansas City. A Web designer III working in Kansas City makes $66,244. The unadjusted hourly rate for this position is $66,244/2,080, or $31.85. Adjusted by 30 percent, the contract rate comes to $41.40.
Contract fee for a Web designer III in Kansas City
Salary $66,244
Hourly rate, unadjusted $31.85
Adjustment factor 30%
Hourly rate, adjusted $41.40
Source: Salary.com, May 2002.
meowman: the analysis Strawbeary provides is fundamentally sound ... what it doesn't take into consideration are market dynamics.
On the one hand you don't want to get screwed / on the other hand, you don't want to price yourself out of the job.
You will have to decide for yourself how far you can push these guys on price before they start to lose interest.
Good luck.
SO, because of what 'distant' just said (which is valid), you take the salary offered, and start a business to offset the lack of 'benefits' -
who wants to bet orochi's really a 17 year old kid popping zits as he types tax advice on his parents computer?
Except for it's not tax advice.
It's labor law advice. ;)
And to answer the question as to what is different between a contractor and a contract employee is this:
A contractor is a person or entity that's contracted for a given amount of money to perform a specific task over a period of time. A contractor is expected to provide and maintain their own necessities that fulfill that contract. They may or may not share a workplace with the contracted (employer) and typically do not fall under the same employment guidelines as would other employees of the employer.
Of course, all of this would be or should be specified in the contract.
A contract employee is essentially a specialized temporary worker. They are contracted to work for a specific time period and are more than likely paid hourly. Unlike regular employees, they are often exempt from particular labor laws (overtime) and should not hold the same expectations that regular employees do.
Contract employees will not receive any extra benefits, perks or excess pay unless stated in the labor contract. Although contract employees share less in terms of employee benefits, it is often harder to terminate them and breach of contract may end in one party or another party compensating for the remainder of the contract.
Side note: this is how temp agencies make ridiculous amounts of money.
Say a standard employee receives $50,000 dollars a year. The total benefits attached to that job can be as high as 55-65%. Employment agencies will charge employers the salary plus the 55% and an additional 35% of the final total. A temp agency employee makes around 30-45% of the total billing of the temp agency and receives very minimal benefits (maybe 15% of total payment).
Regular employee= $50,000 salary, $27,500 benefits and fringe benefits-- total $77,500
Temp Agency Charge= $77,500 plus 35% ($27125)-- total $104,625
Temp Agency Employee= $36,618-- total ~$45775
Regular employee pay per hour= $24.50
Contract employee pay per hour= ~$33.50
Regular employee pay cost to employer per hour= $37.90
Temp Agency charge per hour= ~$51.30
Temp Agency profit per hour= ~$28.85
Temp Worker pay per hour= $17.95
If you are not registered as an Architect in some states it is not allowed to be a contract worker. Just be sure your doing it in a legal fashion, cause it can be a pain for you and the people employing you as a contract worker. I thought this was always a good thing because it forces firms to step up to the plate and deal with everyone as an employee....none of this shit for shineolla.
those 1099's will get you at the en d of the year
snook - could you explain what exactly is not allowed in certain states?
My understanding is that if you are a contractor, then you use your own tools/materials/space/office. Contract employee, the company equips you with a desk/computer/etc. you will probably make a little bit more hourly, but you don't receive the benefits.
I have been in both situations.
well, in the eyes of the government, it's the same thing. There are no differences... individual firms may make this distinction, and set 'rules' (like set hours for you come in, etc.), but that's an agreement you make at the time of hire. Since you wouldn't be a full on employee, one should make very sure that these understandings are made prior to agreement.
Block this user
Are you sure you want to block this user and hide all related comments throughout the site?
Archinect
This is your first comment on Archinect. Your comment will be visible once approved.