in reply to Contractor vs Salary (was Re^3: How much is an web-based application worth?) in thread How much is an web-based application worth?
Ooof, I have to disagree on that one, merlyn. If you're an independent contractor (sole proprietorship here in the States), I think it's different. I agree you have to subtract vacation time, retirement and healthcare. But office space? Materials? marketing and administration costs? Not really significant.
I think it boils down to what it's really worth to you, and whether or not you're running a "business" or are an independent contractor. I would agree the costs are much more significant if you are an employer. But with the tax breaks, I think x2 is FAIRLY close (I would say closer to 1.8x or so). That and paid overtime seals the deal for me. I've been dealing with salary/contracting for around 7 years or so, and my perspective has always been that contracting is much better than salaried. (Granted, I'm a single 26 year old - healthcare is slim, retirement is after tax)
--------------
It's sad that a family can be torn apart by such a such a simple thing as a pack of wild dogs
Re^2: Contractor vs Salary (was Re^3: How much is an web-based application worth?)
by merlyn (Sage) on Mar 17, 2005 at 16:05 UTC
|
In the US, if you're not marketing and admining, you're not a contractor, so you can't be 1099. The things I listed are all necessary to pass the IRS "20 question" test to determine whether you're a contractor. You do have to look and act like a business to be a contractor. That is, you do need to have an office, and perform marketing and admin (spend money on yellow page advertising locally, at least, and have a distinct office for your work). I can't see how you can simply dismiss those.
Unless you're kidding yourself, and you really should be on W-2 temp, instead of 1099 contract. In which case, you probably want to get a lawyer. {grin}
| [reply] |
|
| [reply] |
|
ok, I guess then it comes down to each country's defintion of a contractor. There's a lot less bureaucracy over here. I'm sure there may be subtle differences between a temp and a contractor in our laws, but they don't seem to impact us on a day-to-day basis. A contractor is someone who simply picks up a fixed term contact for work
| [reply] |
Re^2: Contractor vs Salary (was Re^3: How much is an web-based application worth?)
by brian_d_foy (Abbot) on Mar 17, 2005 at 23:32 UTC
|
Tax breaks? Surely you jest. In the US, an independent contractor has to pay the employer contribution of the federal, state, and sometimes city taxes. As an independent contractor, you don't get the employer to chip in on any benefits. You can't just compare the take home pays: you have to figure in everything else an employer provides that doesn't show up on your check stub.
Office space costs money is some places, and is significant. I'm not sure where you live, but it certainly figures into my budget in Chicago. Materials are significant too: I have to buy my own computers, printers, paper, and everything else. I pay for my phone, the lights I turn on, the electricity my monitors turn into heat, and everything else.
Some people are quick to point out that a lot of these expenses are deductible, but you're only saving cents on the dollar. A dollar of deductible expenses does not save you a dollar of tax money.
Many people don't realize what they are spending so they can be a contractor. If the employer supplies you space and equipment and you only work for them and work the same hours everyone else does, you're an employee by another name--you don't pass the IRS's test for independence.
--
brian d foy <bdfoy@cpan.org>
| [reply] |
|
| [reply] |
|
|