1. What is the Contractor to Salary Formula?

The Contractor to Salary formula converts an hourly contractor rate to an equivalent annual salary, accounting for typical contractor expenses and benefits differences. The 0.7 factor approximates the difference between contractor and employee compensation.

2. How Does the Calculator Work?

The calculator uses the Contractor to Salary equation:

Where:

• \( Contractor\ Rate \) — Hourly rate in dollars
• \( Hours \) — Annual working hours
• \( 0.7 \) — Conversion factor accounting for benefits and expenses

Explanation: The 0.7 multiplier accounts for typical benefits (health insurance, retirement, etc.) and expenses that contractors must cover themselves.

3. Importance of Salary Calculation

Details: This calculation helps contractors compare their earnings to salaried positions and helps employers understand equivalent compensation when considering contract vs. full-time hires.

4. Using the Calculator

Tips: Enter your hourly contractor rate and typical annual working hours. The calculator will show the equivalent salaried position compensation.

5. Frequently Asked Questions (FAQ)

Q1: Why the 0.7 multiplier?
A: This accounts for typical benefits (20-30% of compensation) that contractors must provide themselves, plus additional expenses like self-employment taxes.

Q2: How accurate is this conversion?
A: It's a general estimate. Actual equivalency depends on specific benefits, tax situations, and local market conditions.

Q3: Should I use gross or net rates?
A: Use your gross contractor rate before taxes and expenses for the most accurate comparison.

Q4: What about part-time contractors?
A: The formula works the same way - just enter your actual working hours. The result will show equivalent part-time salary.

Q5: Does this account for unpaid time off?
A: Only if you reduce your annual hours accordingly. The calculation assumes all entered hours are billable.