1

I am currently a full time employee, changes have happened that have made me consider my employment at this company. I been just looking around and seeing if anything better is out there.

At first I was opposed to Contract work till one recruiter stated that he thinks I could get $50/hr. This made me reconsider it as I though the amount would have been lower and not worth the loss of benefits.

I still have not decided if I will apply for that job as I first don't know how to compare it to my full time job.

I live in Canada in BC

Current Salary + Benefits

  • Salary: $47000
  • Vacation 15 days:
  • Sick/Personal Days: 10 days
  • Pension Matching : $1200
  • Other Benefits(internet, gym): $2000
  • Health Package:~$5000 (very hard to put a number on this but I got a pretty good health package and probably will never have this kind of package again)
  • Work from home: (can't put a number on this)

Since I live in B.C I also get 10 Stat Holidays.

Now the easiest way I guess is to break everything into a dollar value.

Should I calculate how much the Vacation Days, Sick Days and Stat Days would be in $ value? I calculated $6,000 and not sure if I should put that on my Salary.

If I do put that amount on it then I think my salary is bit over $60,000 Gross.

Contractor Rate

So the contract would be 6 to 12 months so I just took a year to compare against a year of salary.

First I wanted to figure out what the true yearly amount would be for this.

What I did was this

  1. Figured there are 104 weekends days in a year
  2. Said that I will take 15 days vacation a year
  3. Said I will take 10 Personal days a year
  4. Said I will be taking 10 Stat days a year.

So basically I mirroring what I get from my current employer.

I converted it into hours(7.5 / day). I then took that number and times it by $50/hr what got my about $87,000 / year.

Now I have more added expenses (these are rough estimates).

  1. Incorporation cost - $350
  2. Yearly accounting costs - $500
  3. Health insurance - $1,440 / year
  4. Provincial Healthcare - $831 / year

So with these costs, it still seems like contracting will come out a head.

Is my logic roughly right?(numbers might be slightly off, I did it yesterday and recalling from memory)

Questions

  1. Do contractors get Over Time Pay?
  2. In medium to long term contracts can you take vacation half way through (of course no pay)?
  3. Do I have to invoice the client myself (or does depend on how the recruiter does it)?
  4. Will I have to buy my own equipment?

Incorporated Questions

  1. How doe taxes work (Personal Taxes & Corporation Taxes)? Do I just do one lump sum at tax time?
  2. How about EI? Will I have to pay for EI or am I never eligible for that?
  3. How do I pay myself? Do I have them to write me a cheque to my "company" and then pay myself somehow?
  4. How does it lower my taxes?
  5. Since I am a corporation, can I offer myself special benefits? Like say medical insurance? RRSP matching?

I am very interested in giving being a contractor in the I.T field, I hear it is more work to get setup and it can be riskier.

I think I am at a good time in my life to try it as I am good at handling money and I live at home so even if it does not work out, with my Rainy day fund and living at home I could easily be a year or 2(at current spending rate, longer if I cut back) out of work and still be able to make it.

Any advice or material I can read?

closed as too broad by Jim G., CMW, Rhys, jcmeloni, enderland Mar 12 '14 at 16:48

Please edit the question to limit it to a specific problem with enough detail to identify an adequate answer. Avoid asking multiple distinct questions at once. See the How to Ask page for help clarifying this question. If this question can be reworded to fit the rules in the help center, please edit the question.

  • 5
    Hi xiao, welcome to The Workplace. You have a whole lot of questions in there, most of which themselves would deserve a whole Q'n'A thread. Would you mind splitting it up a bit to make it easier for people who only know answers to parts of what you're asking to give an answer. Also, please keep in mind that some things like questions regarding legal advice are off-topic for this site. Read more about it in the help center. – CMW Mar 11 '14 at 17:59
  • @JoeStrazzere - I just mirrored what I get now, I might only get sick 1 in the entire year, I trying to get a common number, if you have better numbers I am all ears. – xiao Mar 11 '14 at 18:20
  • @CMW, Ok any ones in particular I should split up? – xiao Mar 11 '14 at 18:27
  • 1
    @EmilioGort - Still have to pay a monthly premium and stuff like dental and vision is not covered(unless you have a doctor referral but then you still would have to pay for glasses and such just not eye exam). So for that you need extended medical. – xiao Mar 11 '14 at 18:30
  • @xiao I think the first numbered list makes sense as individual questions. The second one I think is generally off-topic because it's about taxes, other law-related topics or specific to contracts. – CMW Mar 11 '14 at 18:31
4

Do contractors get Over Time Pay?

Generally contractors get paid for the hours that they work on a base rate. Some contracts will include a premium for work in excess of 40 hours per week or for off hours work. But that will be by contract.

In medium to long term contracts can you take vacation half way through (of course no pay)?

Most employers are reasonable about this type of request provided it is done in advance and the timing is not during some special push or release. But again this will vary by employer. I have worked contracts where we were expected to be there every day we were contracted for. You can ask about this up front.

Do I have to invoice the client myself (or does depend on how the recruiter does it)?

If you are an independent contractor then you will have to invoice the customer. If you work for an agency then you will just be an employee of the agency and can direct all of these questions to them.

Will I have to buy my own equipment?

This will depend on the contract. Generally most IT shops provide computers and any tools you will need. If you are expected to provide any of your own then they will let you know ahead of time. Most companies prefer(most require) that you use their equipment.

How do taxes work (Personal Taxes & Corporation Taxes)? Do I just do one lump sum at tax time? How about EI? Will I have to pay for EI or am I never eligible for that?

If you are employed by an agency they will take care of the withholding. If you are self employed then you will be responsible for all of the filings and payments. You may or may not be eligible to collect EI but you will be responsible for the payments into it. If you are self employed they are roughly 2x the amount that is withheld from your check.

How do I pay myself? Do I have them to write me a cheque to my "company" and then pay myself somehow?

Generally if you are self employed everything you bring in that is not an expense reimbursement is income. How you manage that is up to you.

How does it lower my taxes? Since I am a corporation, can I offer myself special benefits? Like say medical insurance? RRSP matching?

These are questions for a Tax Attorney or accountant.

3

I've been working as a contractor in the US for few years. I can give you my perspective on things here, which may assist you, and in particular US readers who wonder about your question.

Typically employers here are willing to pay about 30% more for contractors. The reason is that they win back vacations, benefits, unemployment insurance etc. and get added flexibility.

So I have a simple rule of thumb that I use to figure the equivalent and translate from perm to contract. I will take my hourly rate as a contractor and multiply that by 1500 to get the equivalent rate I would charge annually as an employee. So for example if I was making $30ph contract I would be looking for a perm. salary of $45,000pa. Or if I want to make $80ph contract-equivalent, I would be looking for a perm. salary of $120,000pa.

Then I'll try to quantify and add in anything that's a bit unusual about the job I'm considering, for example travel time, if its particularly close or far, or new skills I might acquire and what value they may bring. Also if I will have to spend time away from family, how much of a premium do I want for that. If I have to relocate, what's the cost of living difference, etc.

Not the answer you're looking for? Browse other questions tagged or ask your own question.