New job was going to hire me at $20/hr, but now want to hire me as private contractor

[zylander]

My friend set me up with a job at his work. When I went in for the interview, the boss told me that I would be hired as an employee at a rate of $20/hr, that was about three weeks ago. Now I find out that the company doesnt want to take on any more employees and wants to hire me as a private contractor. This is fine with me, but how much more should I ask for to make up for the taxes that I will have to pay?

**Update**
The company is a start up chocolate company, not yet open to the public, they plan to open up this summer. I will basically be doing what ever is needed in the warehouse/factory; welding, pickups, deliveries, making molds, what ever.

I started today and the first thing I did when I got there was talk to the boss about my pay/position. He wants to hire me as a private contractor but still keep the same $20/hr. All this week the company is doing a huge analysis of the factory and its workers; how much they can afford to spend, how many more people they can take on, when the factory will be ready to open, ect. I decided that since I have absolutely nothing else lined up (my last job, CompUSA ended last Tuesday) that I might as well work for them at the current rate for a week and just make some money. Next Monday after they have done their analysis, I am going to sit down with the boss and the woman in charge of payroll and figure out what I will do. Either I will be hired as an employee or a private contractor at a higher rate or Ill take my weeks worth of pay and go somewhere else. So we'll jsut have to wait and see what happens.

 

[Dissipate]

You will have to pay 7.5% more for social security, since you will have to pay the entire 15% for that.

 

[0roo0roo]

taxes and insurance...?

 

[Nitemare]

30/hour?

 

[OdiN]

Insurance will cost an arm and a leg unless it's just for yourself. So factor that in there.

 

[KillerCharlie]

Originally posted by: OdiN
Insurance will cost an arm and a leg unless it's just for yourself. So factor that in there.

That's why contracting jobs pay so much more. My manager told me that we cost the company over twice what they pay us when you factor in benefits.

 

[WingZero94]

figure in at LEAST 33% for insurance. I wouldn't do it for less than 35 dollars an hour (all the extra hassle you have to go through)

 

[zylander]

Forgot to add that I already have private health insurance through Kaiser. Im not concerned about the benefits that I wont have, Im just worried about the whole tax thing.

 

[WingZero94]

Originally posted by: zylander
Forgot to add that I already have private health insurance through Kaiser. Im not concerned about the benefits that I wont have, Im just worried about the whole tax thing.

Do they know about your private health insurance? Demand more as a contractor for sure. Again, i'd go $35 / hr. If you really wanted the job you could go down to $30, but NO lower.

 

[Fritzo]

Ugh, I did this. You need around 35% of your pay for taxes, not to mention no benefits and they can let you go at any time.

I'd say another $10/hr or forget it.

 

[Nitemare]

Originally posted by: WingZero94

Originally posted by: zylander
Forgot to add that I already have private health insurance through Kaiser. Im not concerned about the benefits that I wont have, Im just worried about the whole tax thing.

Do they know about your private health insurance? Demand more as a contractor for sure. Again, i'd go $35 / hr. If you really wanted the job you could go down to $30, but NO lower.

Yeah, if you add on the cost of insurance, taxes, 401k and aggravation 30-35 sounds reasonable

 

[AgaBoogaBoo]

Originally posted by: KillerCharlie

Originally posted by: OdiN
Insurance will cost an arm and a leg unless it's just for yourself. So factor that in there.

That's why contracting jobs pay so much more. My manager told me that we cost the company over twice what they pay us when you factor in benefits.

That's a good way of thinking about the cost to hire someone, just double your salary and you get what it takes them to have you on board.

Personally, I'd say that you should charge twice, plus some padding to account for the added risks involved. You should also figure out the terms of the contract - maybe what it will cost them for an early termination or something, which obviously requires you to give something in the event that you leave early.

Easiest way to figure this out is to find what a firm that specializes in this would charge for those hours of work, and bill the same rate. Pick a firm that is looked up to in the industry, and charge what they do, or at least have an idea of how your competitors price themselves.

 

[redly]

first off...what kind of work will you be doing...what is your skillset and experience?
Don't underestimate what a company will pay for a contractor. Hell, I was 2 yrs out of electronics tech school in a time when the market was not quite flooded with talent...in Eastern Iowa no less... and I was pulling $40/hr back in 2000

 

[AlienCraft]

Originally posted by: AgaBoogaBoo

Originally posted by: KillerCharlie

Originally posted by: OdiN
Insurance will cost an arm and a leg unless it's just for yourself. So factor that in there.

That's why contracting jobs pay so much more. My manager told me that we cost the company over twice what they pay us when you factor in benefits.

That's a good way of thinking about the cost to hire someone, just double your salary and you get what it takes them to have you on board.

Personally, I'd say that you should charge twice, plus some padding to account for the added risks involved. You should also figure out the terms of the contract - maybe what it will cost them for an early termination or something, which obviously requires you to give something in the event that you leave early.

Easiest way to figure this out is to find what a firm that specializes in this would charge for those hours of work, and bill the same rate. Pick a firm that is looked up to in the industry, and charge what they do, or at least have an idea of how your competitors price themselves.

Sound advice that.
Most people don't have a clue as to how to figure what something should cost vs how much to charge.

 

[AgaBoogaBoo]

Originally posted by: AlienCraft

Originally posted by: AgaBoogaBoo

Originally posted by: KillerCharlie

Originally posted by: OdiN
Insurance will cost an arm and a leg unless it's just for yourself. So factor that in there.

That's why contracting jobs pay so much more. My manager told me that we cost the company over twice what they pay us when you factor in benefits.

That's a good way of thinking about the cost to hire someone, just double your salary and you get what it takes them to have you on board.

Personally, I'd say that you should charge twice, plus some padding to account for the added risks involved. You should also figure out the terms of the contract - maybe what it will cost them for an early termination or something, which obviously requires you to give something in the event that you leave early.

Easiest way to figure this out is to find what a firm that specializes in this would charge for those hours of work, and bill the same rate. Pick a firm that is looked up to in the industry, and charge what they do, or at least have an idea of how your competitors price themselves.

Sound advice that.
Most people don't have a clue as to how to figure what something should cost vs how much to charge.

You made a good point too, cost vs charge should be different numbers, no reason to sell at cost when people expect to pay more

It won't be easy going up to the boss and asking for X times what the hourly rate was, but find what the competitors charge, and explain to him his options, and why you are the best balance between price and skill, or why you are better than others, etc.

 

[zylander]

The company is a start up chocolate company, not yet open to the public, they plan to open up this summer. I will basically be doing what ever is needed in the warehouse/factory; welding, pickups, deliveries, making molds, what ever.

I started today and the first thing I did when I got there was talk to the boss about my pay/position. He wants to hire me as a private contractor but still keep the same $20/hr. All this week the company is doing a huge analysis of the factory and its workers; how much they can afford to spend, how many more people they can take on, when the factory will be ready to open, ect. I decided that since I have absolutely nothing else lined up (my last job, CompUSA ended last Tuesday) that I might as well work for them at the current rate for a week and just make some money. Next Monday after they have done their analysis, I am going to sit down with the boss and the woman in charge of payroll and figure out what I will do. Either I will be hired as an employee or a private contractor at a higher rate or Ill take my weeks worth of pay and go somewhere else. So we'll jsut have to wait and see what happens.

 

[Kelemvor]

Definitely the Insurance is the big thing. It can cost you hundreds of dollars a week just for that.

 

[Adul]

how much do you want to make per hour. Double that. should be at least 40 to 45.

 

[ebaycj]

Originally posted by: zylander
My friend set me up with a job at his work. When I went in for the interview, the boss told me that I would be hired as an employee at a rate of $20/hr, that was about three weeks ago. Now I find out that the company doesnt want to take on any more employees and wants to hire me as a private contractor. This is fine with me, but how much more should I ask for to make up for the taxes that I will have to pay?

I would ask for at the bare minimum $75/hr, because in a contract position you are not guaranteed anything. You could work 20 hr/wk one week and 60 hrs/wk the next. Plus as others have said you have to cover your insurance, retirement, social security.

take their $20. add 50% for ins/ret/ss (now total of $30). Double that for your job insecurity (now total of $60). add 25% for the hassle, and lack of bonus. (final total of $75)


Also what kind of work is it? One of my buddies is a level 2 tech support contractor (LOW KEY TECH JOB). He gets paid something ridiculous like 30k. His employer (contracting company) bills him at $80/hr to their client..

 

[IceBergSLiM]

as a contractor you will be able to write off just about everything.

That said 20% of employer costs related to employees are the benefits for which you are getting none. So therefor you should demand $20 x 1.20 as your fair compensation.

 

[Rage187]

Originally posted by: zylander


I started today and the first thing I did when I got there was talk to the boss about my pay/position. He wants to hire me as a private contractor but still keep the same $20/hr.

yeah, no.

You are getting scammed.

 

[Saga]

Originally posted by: Rage187

Originally posted by: zylander


I started today and the first thing I did when I got there was talk to the boss about my pay/position. He wants to hire me as a private contractor but still keep the same $20/hr.

yeah, no.

You are getting scammed.

The above is pretty accurate.

By taking on a contracted position you typically lose quite a bit of things; severance packages, stock options, but most importantly - benefits.

For $20/hr if I was asked to take a contracted position in lieu (is it hourly, or just salaried broken down to $20/hr?) I would most likely demand $30/hr and see where I ended up (probably around $28/hr).

You are being scammed. If the intent was for a stable 9-5 and they turned your offer into Salary you are basically being offered a temporary position at reduced benefits where you atypically have to provide your own equipment (see: PC/Laptop) and your job can basically end at any moment if they desire because you're a LOT easier to get rid of.

I'd probably pass, the change itself is enough to break my trust in any potential employer without a very valid explanation.

 

[PlatinumGold]

Originally posted by: zylander
My friend set me up with a job at his work. When I went in for the interview, the boss told me that I would be hired as an employee at a rate of $20/hr, that was about three weeks ago. Now I find out that the company doesnt want to take on any more employees and wants to hire me as a private contractor. This is fine with me, but how much more should I ask for to make up for the taxes that I will have to pay?

$45 at least. also make sure that they have you come in like an employee, 4 to 8 hour blocks of time.

 

[Nitemare]

Originally posted by: zylander


I started today and the first thing I did when I got there was talk to the boss about my pay/position. He wants to hire me as a private contractor but still keep the same $20/hr.

Did you laugh?

 

[Capt Caveman]

Originally posted by: PlatinumGold

Originally posted by: zylander
My friend set me up with a job at his work. When I went in for the interview, the boss told me that I would be hired as an employee at a rate of $20/hr, that was about three weeks ago. Now I find out that the company doesnt want to take on any more employees and wants to hire me as a private contractor. This is fine with me, but how much more should I ask for to make up for the taxes that I will have to pay?

$45 at least. also make sure that they have you come in like an employee, 4 to 8 hour blocks of time.

125% pay increase? Not likely. 33% is reasonable.