Freelance Rate Calculator
I was doing some analysis on freelancing rates and decided to turn a spreadsheet I had into a simple rate calculator that others can use. No tracking, no ads, no backend harvesting data. All the values are stored in the url so you can bookmark or share your rates if you want.
Trending on Indie Hackers
Indie hackers selling to indie hackers?
This is great! One question: I'd always thought/been told that the self-employment tax is 15.3% -- why do you use 7.65%?
I'm not an expert here so I easily could be wrong. It's my understanding that in typical full time employment the employer pays 7.65% and withholds the other 7.65% from the employees paycheck for social security and Medicare. So when converting from full time to self employed you gain the additional responsibility of the employers half of these taxes.
I think you're correct - but I think that means that when you freelance, you actually end up paying both halves, which adds up to 15.3%, on top of whatever income tax you pay.
This is why many freelancers end up filing as an S Corp -- over a certain income threshold (some say around $80k/yr), it becomes advantageous to treat yourself as a business instead of just a sole proprietor with pass-through income in order to avoid the full 15.3% self-employment tax.
Disclaimer: I'm definitely not an expert! But I've done a fair amount of research and asked questions of my CPA, and this is my understanding.
When I was trying to figure all of this out, I had some crazy spreadsheets... because the way you choose to file also impacts your options as far as how much you can put into various types of retirement accounts. If you were able to make an app that incorporated all of those elements of the financial decision, I'd be all about it. :)
That makes sense. I was thinking of the pass through case where the conversion from full time to freelance you're only adding the employer part of the tax. You were always responsible for half of the tax so I didn't include it in the calculator.
Adding the s Corp option would be great, but I don't know enough of those rules to do that yet.