Quantifying Benefits for Contractor vs Employee
Someone in here was arguing recently about the actual cost of benefits and it got me thinking...
What's the magic number for doing this Contractor-Employee compensation? For some reason, I believe it's about 16%. Does that sound right?
I'm talking about how much more a contractor should be charging to do the same job as the employee beside her. So if employee is making $100k and has "standard" benefits, vacation and stats then the Contractor should be looking at $116k to cover their unpaid vacation/stats as well as source out some supplemental health/dental benefits.
Let's say the employee gets 4 weeks paid vacation plus the 2 week's worth of stat's. Right away we know the contractor needs to make 52 weeks of money in the only 46 weeks she works. So we add 6/52=11.5% right there and our multiple is already 1.115 but I'm looking for a decent estimate of the remaining ___% and 4.5% seems high.
How do we calculate/estimate the rest? What are your basic, standard (kind of shitty) benefits worth? They're not $4,500 are they?
RRSP matching of 5% should just be counted as straight cash, shouldn't it? Or should it be ignored because it's not being shown in the employee's $100k? Or should it be added to the employee's $100k at the start of the exercise?
Thanks for your expert Marth!