This vCalc personal finance equation computes a compensation equivalent for an independent (self-employed) contractor.

Usage

The primary basis for an independent contractor's equivalent compensation is the Gross salary being compared.  This is the salary or wages paid to you by an employer if you had been employed by the company.

The additional factors are broken down into two additional costs that the salaried employee includes in total compensation and which the independent contractor still has to pay.  The idea is that these latter two costs of a typical benefits package (which might include medical, dental, other health or life insurance) and  the mandatory cost to the independent contractor of social security and medicare, should be included in the total compensation as an independent contractor if you're trying to consider equivalent compensation.

The default percentages provided for the benefits cost should be modified to reflect any better knowledge you might have about this percentages as they apply to your specific case. The default percentage is based on general averages of benefits provided on the Internet that is easily searchable.

The tax factor added into this equation is based on the Social Security publication No. 05-10003 and uses 2015 tax numbers.

The final hourly wage is based on the ratio of the total compensation of an independent contractor to the vCalc constant for employment hours per year.  This employment hours per year constant is based on fifty-two 40-hour work weeks.

See also

Cost of an Employee Vs Independent Contractor

Social Security and Medicare Tax

Social Security and Medicare Tax (2014/2015)