Thinking About Starting a Work from Home Business - Or doing some
Freelance Work? Here
are some things to think about when setting your rates
The first step is to find
some local salary information. You
want to be competitive.
Check classifieds to see if
salary is listed in any of the ads or search the internet.
See our Salary Information by Job and Location
For example, I would expect a clerical person to make $25,000 to $35,000,
minimally, if they were employed full time and receiving benefits. That
works out to approximately $12.00 to $16.83 per hour.
Again, your own local market may be higher or lower based on cost of
living and the labor market, so do some checking.
However, this hourly rate is not the only cost that an employer pays for an
employee. So, don’t sell yourself
short. You should be able to
command more than the going hourly rate for your services. You need to keep the
following in mind:
If an organization hires a contract or freelance person they will save money on taxes.
You will be paying all taxes on your own. For instance, as an
employee you pay approximately 7.65% in FICA tax and the employer picks up the
other half. When you are self-employed you need to pay both sides or
approximately 15.3% of earnings. You also have to pay quarterly estimated
taxes and/or monthly payroll taxes.
In addition, the
organization will not have to pay for any benefits for you.
Paying full benefits (medical, dental, short term disability, vacation,
holidays, retirement, etc.) for an employee can often add an additional 30-50%
to the total annual cost of compensation.
So, a $15.00 per hour
employee can easily end up costing an organization closer to $21.00 per hour
when you add in benefits and taxes. (not
to mention providing office space and equipment)
So, if you want to work as a
contractor or sell services on a freelance basis you need to factor in these things when coming up
with a rate. Not having them
provided to you represents a loss in compensation to you and a cost savings to
the employer.
If you are working with
organizations that are willing to pay by the hour it is probably just
administratively easier for both you and the organization keep track of work
that way.
It will probably be
necessary, however, to come up with separate rates for all of the different
kinds of things you'd be doing. In
a work from home typing business, for instance, you would need to develop rates
for typing envelopes, straight documents, documents with footnoting, etc.
To do this, you need to
estimate how much time it takes you to complete each of the tasks. Multiply the
time it will take by the hourly rate you came up with (15 minutes = .25 hours x
hourly rate = piece rate) Then factor in the cost of any materials you will
need (will you be providing envelopes and paper, printer cartridges, etc?).
And with experience you'll become more efficient and will make more money
per hour.
Incidentally, if you are working as a contract person, you should get flexible
hours. If an organization gives you specific hours to work, it may be
treating you as an employee under the IRS regulations. This is one of the
IRS tests to determine whether someone is a contractor or employee. And
the IRS has been cracking down on contract vs. employee situations.
Interested
in seeing a list of Freelance Jobs to bid
on??
Kirsten Ross is mother of two sons and is
a Certified Human Resource Professional (SPHR) dedicated to helping women
achieve more life balance and to transforming the design of work.
Visit Womans-Work.com at http://www.womans-work.com
to search our revolutionary flexible work job board featuring more than 35,000
fresh work from home, part time, job share, flex time and telecommuting
opportunities, search for a job share partner or
read valuable career, life balance and family articles. You may also email
her at mailto:KRoss@Womans-Work.com
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