Category: 1099 vs. W2 Hiring
How to Price a 1099 Offer Compared to a W2 Salary
📝 Refers to calculating the higher rate self-employed contractors must charge to equal traditional employment income. W-2 employees receive benefits like employer-paid payroll taxes, health insurance, 401(k) matching, and paid time off. To break even, 1099 contractors typically need to mark up their W-2 base salary equivalent by 30% to 50% (or use a ~1.3x to 1.5x multiplier) to account for full self-employment tax, overhead, and non-billable time.
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When a client offered a 1099 role instead of W2, I multiplied my target base salary by 1.35 to cover overhead. They accepted without pushback.
Analyzes the multiplier needed when converting a W2 salary figure into an equivalent hourly or contract rate that covers lost benefits.