question for contract programmers...

[unformed 0]

i left my full time job a year ago and am looking to go freelance for 6 months or so at a time. ... but got some questions...

what is the typical going rate, or what do you normally charge/get paid for?

i'm seeing between 40-50/hr, but that's probably with no benefits or any other perks.

Also if you're getting paid by contract (1099) when do taxes get covered? Is there a way to (legally) funnel or reduce the "income" to pay less in taxes?

This ad space for sale.

[LisaM 0]

The rate depends on where you live. I only got $35 an hour here. But working for the government, I also get $65. Somewhere like Chicago $50 is dirt cheap. It's more like $80.

You pay your self-employment taxes quarterly to the IRS and it works out nicer that way.

~ Lisa
~ Do you Rigminder?

[DrewEckhardt 0]

Quote

i left my full time job a year ago and am looking to go freelance for 6 months or so at a time. ... but got some questions...

what is the typical going rate, or what do you normally charge/get paid for?

It depends on whether some one else is reselling your services, W2 or 1099, location, specialization, experience, contract term, etc.

Quote

i'm seeing between 40-50/hr, but that's probably with no benefits or any other perks.

I've seen $25-$125/hour.

Drew's Software, LLC in Boulder, CO specializing in complex systems software has charged $70 (open ended)-$105/hour (with a 4 hour minimum) finding my own work and $70/hour as a sub-contractor (where they'd keep me working full-time in exchange for their $35/hour markup) all on form 1099s.

Quote

Also if you're getting paid by contract (1099) when do taxes get covered? Is there a way to (legally) funnel or reduce the "income" to pay less in taxes?

You need to talk to an accountant you trust.

You want to form an LLC or corporation which files as an S-corp. That company pays federal & state unemployment taxes, the employer's share of social security/medicare, and has payroll taxes automatically witheld.

It pays you what the IRS considers to be a "reasonable" wage - ask your accountant. That's subject to the full 15% FICA + medicare tax. It distributes profits to its share holders (you) which are then taxed once at your personal tax rate.

It can provide other benefits to you as other companies do.

This is better than being a sole proprietor because that would make ALL of your income up to the cap subject to social security, you can pay for some benefits with pre-tax dollars, and it allows you to collect unemployment if business gets slow and you need to lay yourself off.

You want to work from home every day. Your clients want that because when you're determining how your work gets done you're a contractor while when they tell you how to work you're an employee. That makes driving to your customer's sites business travel which reduces your profits at 44.5 cents a mile instead of commuting which is not deductable.

You need to talk to an accountant you trust.