W2 Hourly vs Corp-to-Corp: Comparison (pay, taxes, rate, account)

[vauser]

Hey Folks,
I am planning to switch to Corp-to-Corp from W2 hourly for a few reasons. If you could share your experience with either and let me know which might be a better option and for what reason, that would be great.

Also, more importantly, I would like to know how much more one should charge to account for the additional FICA taxes (7.65%), workman's compensation and unemployment insurance costs. Is it mandatory to pay for workman's compensation and unemployment insurance even if it is a 1-person company where I would be the only employee in the company's payroll.

Also, for the rate comparison between W2 hourly and Corp-to-Corp, please assume the following:

* Per hour rate is $50 on W2.
* There are no benefits on W2 - no health insurance or holidays or vacation or 401K.

So, the Corp-to-Corp equivalent need not (and should not) factor in any benefits at all, whatsoever. Thanks much!

[SomeGuyInFairfax]

First, the IRS is MUCH friendlier to corporations than wage earners.

If price is being negotiated it would be fair to ask for $65-$70 to compensate for your payroll taxes (and their lowered admin expense).

Workers Comp: Not required for self-employed persons, but you can still buy in the event you hurt yourself on the job.

[vauser]

Hmm.. That would be about 30 to 40% more. My employer is willing to give about 10% more on W2 to account for the additional FICA taxes (7.65%). Is there anything here that should warrant for the additional 30 to 40%?

[FindingZen]

This would be more appropriate for the Personal Finance sub-forum. I'm moving it there.

[SomeGuyInFairfax]

Originally Posted by vauser

Hmm.. That would be about 30 to 40% more. My employer is willing to give about 10% more on W2 to account for the additional FICA taxes (7.65%). Is there anything here that should warrant for the additional 30 to 40%?

Not sure how large the organization and the costs they incur to process your payroll but that is something to should be factored in.

The fact that they are allowing the corp-to-corp switch shows that they understand the financial benefit to them -- which is probably more than $5/hr.
Then again, there are significant tax advantages to you as well, and they are probably aware of that too. At the very least aim for 60.00.

[SteveArmy]

in my field professional insurance is often required from contractors and thats expensive, whereas this may be free if going thru a employer-of-record kind of setup.
a reverse of your question: how much will employer-of-records(W2 processors) company charge so a 1099 contractor can go thru them as W2 contractor? The lowest I heard was $10/hr and the highest was 25% of the pay