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Most people underestimate the gap. As a contractor you pay both sides of FICA taxes (15.3%), lose employer-paid benefits, and need to cover your own PTO. A common rule of thumb is to charge 1.4–1.6× your equivalent hourly salary rate, but our Contractor Rate Calculator gives you a precise number based on your actual compensation package.

The biggest difference is self-employment tax — 15.3% on net earnings (12.4% Social Security + 2.9% Medicare). As an employee, your employer pays half. As a contractor, you pay the full amount. You'll also need to make quarterly estimated tax payments to the IRS instead of having taxes withheld from each paycheck.

An LLC isn't required to start contracting, but it provides liability protection and can offer tax advantages. Many contractors start as sole proprietors and form an LLC once they have steady clients. Consult a tax professional for your specific situation — our calculators focus on the compensation math, not legal structure.

Employer-sponsored health insurance is often worth $6,000–$20,000+ per year depending on your plan and family size. Our calculators let you include the value of benefits in the comparison so you can see the true cost difference. As a contractor, you can deduct health insurance premiums from your taxable income.

Common deductions include home office expenses, equipment and software, professional development, travel, internet and phone bills (business portion), and health insurance premiums. Our calculators estimate a baseline business expense rate, but your actual deductions will depend on your specific situation.

Absolutely. Many professionals move between contracting and full-time roles throughout their careers. Use our Employee Salary Calculator to understand what salary you'd need to match your contractor income if you're considering a return to full-time work. The key is knowing your numbers so you can negotiate effectively.

Employees often get 401(k) matching (free money), while contractors must fund their own retirement. However, contractors have access to SEP-IRAs and Solo 401(k)s with higher contribution limits. Our Contractor Rate Calculator factors in employer retirement contributions so you can see the full compensation picture.

No. All calculations run entirely in your browser using JavaScript. Your financial data is never sent to a server, never stored in a database, and never shared with anyone. You can verify this — the calculators work even with your internet connection turned off.