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!