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How do I figure out the best 1099 salary for myself?

I'm a software engineer. I know exactly what my salary range is for "regular" full-time employment. However, I'm currently considering an offer at an awesome company with the catch that I'd be hired as an independent contractor on a 1099, which, of course, means no real benefits (including health insurance), no vacation, and that I have to take care of my taxes on my own. The team is distributed, so I'd be working from home, but, ideally, I'd get myself some desk space in some type of co-working environment.

My question for you smart individuals is what exactly is the formula to figuring out the best 1099 salary for myself based on my "regular" salary range?

Much thanks in advance!

- Jonathan

27 Replies

Fareez Ahmed
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Fareez Ahmed Entrepreneur
Software Engineer Seeking New Opportunities
Could you kind share your findings? In a similar situation. ------ Sent from my mobile device
Brian McConnell
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Brian McConnell Entrepreneur
Head of Localization at Medium.com
The answer is as much as possible but be aggressive with withholding/estimated payments. You'll get it back later.
Duane Nickull
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Duane Nickull Entrepreneur • Advisor
Chief Marketing Officer, Co-Founder at Cheddar Labs
The information provided is not sufficient to provide an accurate answer. This is more than just a 5 minute response. There are many factors like taxes, materials required for performing your duties, amortization of any larger acquisitions, etc. There are legal, accounting and practical aspects required to answer your question.

I would recommend you get an outside consultant to deal with this. I can do this but you can also find others in your area to help ascertain the best path forward.

Best wishes

Duane Nickull
Jonathan Barronville
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Jonathan Barronville Entrepreneur
Software Engineer at npm, Inc.
@Duane Nickull:

I know that there are many factors to this question. I'm just looking for where to start, including figuring out what all of those factors may be and maybe a formula or two that I can go by. It's mostly calculating the taxes that confuses me.

Thanks.
Pavel Karoukin
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Pavel Karoukin Entrepreneur
I Fix Problems
take your regular salary, multiply by two and adjust it based on number of hours you are expected to dedicate to it.
Jonathan Barronville
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Jonathan Barronville Entrepreneur
Software Engineer at npm, Inc.
I should also point out that I currently work as a contractor, but I get paid by the hour, and it's done on a W2, so I also know my hourly rate range as well. I'm really just having a hard time working out the taxes and thinking about it with the annual salary perspective.

- Jonathan
Jonathan Barronville
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Jonathan Barronville Entrepreneur
Software Engineer at npm, Inc.
@ Pavel Karoukin:

Can you elaborate on that a bit please?

Thanks.

- Jonathan
Brian McConnell
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Brian McConnell Entrepreneur
Head of Localization at Medium.com
Get as much as you can and overpay estimated taxes then hire a good CPA when you file. Treat it as money in a savings account because you'll get it back via refund. If you think about it that way its not so painful to write the checks.
Duane Nickull
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Duane Nickull Entrepreneur • Advisor
Chief Marketing Officer, Co-Founder at Cheddar Labs
Start with this:

- where are you located?
- where is the company located?
- will you be paid by the foreign or a local branch?
- how many materials will be required for you to do your job
- are you full time or can you provide an idea of expectations from your employer
- salary vs commission vs a combination
- anything else that is relevant
- ...

So many more factors.

D
Jonathan Vanasco
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Jonathan Vanasco Entrepreneur • Advisor
Co-Founder at Aptise
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