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Contractor vs Employee Calculator
See the full cost difference between hiring a W2 employee and a 1099 contractor for the same role.
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W2 EMPLOYEE ADDITIONAL COSTS
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Frequently Asked Questions
Why do contractors charge more per hour than employees?
1099 contractors pay both employer and employee portions of Social Security/Medicare (15.3% vs 7.65% for employees). They also get no paid vacation, sick days, or benefits, and must fund their own retirement. A contractor charging $80/hr may net less than an employee at $60/hr after taxes and costs.
When does it make sense to hire a contractor vs employee?
Contractors: short-term projects, specialized skills, variable workloads, or when direct control over work methods is less important. Employees: long-term roles, tasks requiring significant training, roles where cultural fit and retention matter, and roles where misclassification risk with contractors is high.