Thinking of being an IC? Read this before accepting a job offer... - My 2 cents

I just declined an offer with a company as an IC where they wanted to pay 3.5 cpl for editing and 7 cpl for transcription - and said there is very little transcription.  Here's how to evaluate what you'd really be paid:

Let’s say an employer expects you to edit 250 lines @3.5 cpl.  That is $8.75/hour.

Self-employment matching tax  is 6.2% for Social Security, 1.45% for medicare which means you’d pay 54 cents out of the above just for the matching portion of taxes that an employer would pay.

That in itself would mean you’d actually be paid an equivalent of $3.28 cpl.

Let’s say an employer allows 10 PTO days a year and you only did straight editing (just for hypothetical purposes).  With the above example:

8.75x8 hours=$70/day or $700/year value of PTO.

If you’re self employed the breakdown of that value means this for a year:

If you were an employee:  $18,200 a year income and they pay the matching taxes/time off.

Self-employed:  $17,500 income  (calculated as 50 weeks@$350/week)

Self-employment matching tax for a year:  $1085 for Social Security, $253.75 Medicare=total of $1338.75

$1338.75+$700 value for 10 days PTO=$2038.75

Take the base of $18,200 pre-tax income-$2038.75=$16,161.25

$16,161.25/50 Work weeks = $323.23 a week/$8.08/hour=actual pay rate is 2.8 cpl which is $7.00 an hour - below federal minimum wage.  

Plus there’s the value of any health insurance premiums that employers pay which most pay some of that which would bring that equivalent down even more.  

Think about this and refuse to accept such low offers!

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