How Do I Calculate an Hourly Rate from Salary? Use this Calculator.

How do I calculate an hourly rate from salary? It’s a question we receive a lot. The answer has never been easy– until now. Check out our salary to hourly wage calculator towards the bottom of this post for an immediate answer.

Usually we get this question when small business owners are trying to determine whether to hire an independent contractor or a full-time employee. So, which is more expensive? In some ways, full-time employees cost employers more. With W-2 designated employees, businesses are required by law to cover employer taxes, roughly a 15% markup on salary, depending on where the employee lives and organization is registered.

Sometimes hiring an independent contractor, or 1099 worker, is a more economical choice for an employer looking to get work done on a lean budget. But not always.

Contractors can adjust their hourly rates to include things like the costs of taxes, healthcare, paid leave, and monthly expenses (like equipment or office space), passing incremental costs through to employers.

Depending on how rates are calculated, how long you need help on your project, and how diverse of a scope of work you are hiring for, a contractor could end up costing your organization more than hiring a full-time employee would have. Not to mention, if you scope-creep a contract worker, and he or she starts doing more “employee” type tasks, you could be at risk of IRS penalties that crackdown on employers hiring independent contractors where W-2 employee standards make more sense.

Looking to get a handle on how much to pay your independent contractors? Use this salary to hourly converter calculator to input costs associated with full-time employees to accurately determine contractor rates.  

How Do I Calculate an Hourly Rate from Salary?

If you’re looking for a more robust workforce planning tool, check out the Essential Employee Hiring Kit. It comes with excel worksheets for employee hiring planning, real benchmark salaries for the most popular job roles in small and midsize businesses, and your own customizable salary converter to include any/all costs that your businesses incurs.

Get the Essential Employee Hiring Kit here.

Note: parts of this text was originally published on 2/7/19.