I know I'll be hit with another 7.5% in self-employment taxes, but what's appropriate for the other added expenses (bookkeeping, billing, etc.)
It's more than 7.5% - the number at the bottom of schedule SE is 15.3% of the amount up to $97,500 (and 2.5% of any amount above that), and although half that is deductible from your regular income, it's still an effective rate of 10-12% most of the time.
You also need to consider that as a W-2 you probably got benefits - leave, insurance, etc that you won't get as a 1099. I'd think a $50/hr w-2 should need $75 as a 1099, and I remember seeing one rule-of-thumb somewhere that it should be as high as $100 (partly because as a W-2, if the work runs dry temporarily they'll find something for you to do and pay you, as a 1099 they'll send you home till more work comes in)
Thanks for the response mishatx. This is new area for me and I thought I was erring on the safe side with a 20% increase - just goes to show how new I am. I'm not sure if I'll be able to get another 50% on top of my normal rate, but it's good to know that's a realistic number.
As a W-2 employee you pay 7.65% for social security taxes. As a 1099 contractor you pay both the employee and the employer portion, so it doubles to 15.3%.
We pay contractors 40-50% more than a W-2 employee, so if you would make $50/hr as an employee, I would ask for $70-$75 minimum as a contractor.
Also think about how much time you will be working or not. People who employ contractors sometimes conveniently forgot that contractors don't get 10 paid holidays or a few weeks paid vacation. And sick days? of course not.
But if they are expecting you to work 50 hour weeks than you might be coming out way ahead.
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