--- title: "Contractor vs Employee Cost Calculator | MCC Solutions" description: "Compare the yearly cost of an employee, with payroll costs and paid idle time, to a contractor's hourly rate. Free and private, runs in your browser." url: "https://mcc-solutionsnj.com/bookkeeping/contractor-vs-employee-cost-calculator" --- Free tool # Contractor vs employee cost calculator ## Overview Enter an employee's wage and extra costs, and a contractor's hourly rate. See which costs less per productive hour and the rate where they break even. [![Intuit ProAdvisor Gold tier badge](/img/credentials/intuit-proadvisor-gold.png)](https://proadvisor.intuit.com/app/accountant/search?searchId=matthew-coleman77)Gold tier in Intuit's ProAdvisor program. [See my Intuit listing](https://proadvisor.intuit.com/app/accountant/search?searchId=matthew-coleman77) Employee hourly wage ($) Paid hours per year Employer taxes and insurance (% of wages) Paid hours that are not productive (%) (time off, training) Benefits per year ($) (optional) Contractor hourly rate ($) Python scripts ยท $29 ### 1099 vs W-2 Net Take-Home Simulator (Python) See what a contract offer is really worth against a salary: federal tax, payroll tax, self-employment tax and state tax side by side, and the 1099 amount that matches your W-2 take-home. [See what is inside ($29)](/toolkits/contractor-vs-w2-simulator)14-day full refund Share ## Put this tool on your own site Free to use. Paste this where you want it to appear. It runs in the visitor's browser, so nothing they enter is sent to us. [See every calculator you can embed](/embed) How it works ## How it works The employee's cost is wages plus a burden percent for employer taxes and insurance, plus benefits. The calculator divides that by **productive hours**, the hours left after paid time off and training, to get a cost per productive hour. That is the fair number to hold up against a contractor's hourly rate. Want a second pair of eyes on your books? [A free bookkeeping health check](/bookkeeping/health-check). This only compares cost. Whether someone is an employee or a contractor depends on legal tests, so ask an employment attorney or your accountant. FAQ ## About this calculator **Is it cheaper to hire a contractor or an employee?** It depends on the rates and on how many hours are actually productive. Contractors cost more per hour but you do not pay payroll taxes, benefits or paid idle time. The calculator compares the cost per productive hour. **Can I choose to treat someone as a contractor?** Not freely. Whether a worker is an employee or an independent contractor turns on legal tests about control, independence and the relationship, set by federal and state law. New Jersey applies a strict test. Ask an employment attorney or your accountant. **What is the burden percent?** Everything added to wages for employer taxes, insurance and similar costs, as a percent of wages. The employee cost calculator shows how to work it out. **What is idle time?** Paid hours that are not productive, such as holidays, vacation, sick time and training. Contractors usually bill only for the hours they work. **Is anything saved?** No. The math runs in your browser and nothing you enter is sent to us. Work out the burden with the [employee cost calculator](/bookkeeping/employee-cost-calculator), check whether you must send a form with [do I need to send a 1099?](/bookkeeping/do-i-need-to-send-a-1099), or read [the 1099 contractors checklist](/bookkeeping/guides/1099-contractors-checklist-for-nj-businesses). More free tools: [CAGR calculator](/bookkeeping/cagr-calculator), [Simple interest calculator](/bookkeeping/simple-interest-calculator), [Time card calculator](/bookkeeping/time-card-calculator), or [see all free tools](/free-tools). Free ### Month-End Close Checklist (PDF) The five-day close, one page to print. Enter your email and we send a link to confirm it is yours, then the download. We may email you about new toolkits, and every email has an unsubscribe link. General information, not tax or legal advice. [How we write and check our tools](/editorial-standards). Keep this calculator on your phone: [Add MCC Money to your phone](/tools/mcc-money-app). It's free, works offline and holds 62 calculators. Python scripts ### 1099 vs W-2 Net Take-Home Simulator (Python) See what a contract offer is really worth against a salary: federal tax, payroll tax, self-employment tax and state tax side by side, and the 1099 amount that matches your W-2 take-home. [See what is inside ($29)](/toolkits/contractor-vs-w2-simulator) Also in the [Solopreneur Money Toolkit](/toolkits/solopreneur-money-toolkit): 4 products for $99 instead of $146 separately. ## Want clean payroll and contractor records? [See bookkeeping](/bookkeeping/)[Call (908) 444-6373](tel:+19084446373)