Compare the true financial value of a salaried W2 position against a C2C contract rate.
W2 Employee Offer
$
$
$
Estimate approx 15-20% of salary if unknown.
days
Corp-to-Corp (C2C) Offer
$/hr
$
Insurance, accounting, software, LLC fees.
days
Includes holidays, vacation, and sick days.
weeks
Gap between contracts.
Total W2 Package Value:$0
Adjusted C2C Net Value*:$0
Difference:$0
Break-Even C2C Rate Needed:$0/hr
Billable Hours per Year:0
*C2C Net Value adjusts for the extra Employer FICA tax (7.65%) you must pay as a corporation, business expenses, and unpaid time off.
Understanding W2 vs Corp-to-Corp (C2C)
Choosing between a salaried W2 position and a Corp-to-Corp (C2C) contract involves more than just comparing the hourly rate to the salary. As a W2 employee, your employer covers significant overhead costs, including the employer portion of FICA taxes, health insurance, paid time off, and equipment. As a C2C contractor, you are a business entity, and those costs transfer to you.
Key Factors in the Calculation
Employer FICA Tax (7.65%): In a W2 role, your employer pays half of your Social Security and Medicare taxes. In a C2C arrangement, your corporation is the employer, meaning you pay both halves (often referred to as Self-Employment Tax when passed down to the individual). This calculator subtracts that 7.65% "employer portion" from the C2C revenue to create an apples-to-apples comparison with a W2 salary.
Benefits Package: Health insurance, 401(k) matching, life insurance, and bonuses often add 20-30% to the value of a base salary. C2C contractors must purchase these independently, often at higher market rates.
Billable Hours: A standard work year is 2,080 hours. However, W2 employees get paid for holidays and vacations. C2C contractors only get paid for hours worked. If you take 2 weeks of vacation and 10 national holidays, your billable hours drop significantly.
Bench Time: Unlike W2 employment, contracts end. Prudent contractors factor in 2-4 weeks of "bench time" (unemployment) per year to account for the time spent finding the next client.
How to Use This Calculator
W2 Section: Enter your base annual salary. Estimate the cash value of your benefits (e.g., if the company pays $500/mo for insurance and matches $3,000 in 401k, enter $9,000).
C2C Section: Enter the hourly rate offered. Estimate your annual business costs (LLC filing, liability insurance, accounting fees).
Time Off: Be realistic about unpaid time off. Remember, as a contractor, you don't get paid for Christmas, Thanksgiving, or sick days.
The "30% Rule"
A common rule of thumb in the IT and consulting industry is that a C2C hourly rate should be roughly 30% to 50% higher than the equivalent W2 hourly breakdown to maintain the same standard of living and risk profile. This premium covers the lack of job security, administrative overhead, and tax burdens.
function calculateComparison() {
// 1. Get W2 Inputs
var w2Salary = parseFloat(document.getElementById('w2_salary').value);
var w2Bonus = parseFloat(document.getElementById('w2_bonus').value);
var w2Benefits = parseFloat(document.getElementById('w2_benefits').value);
var w2PtoDays = parseFloat(document.getElementById('w2_pto').value);
// Validation / Defaults
if (isNaN(w2Salary)) w2Salary = 0;
if (isNaN(w2Bonus)) w2Bonus = 0;
if (isNaN(w2Benefits)) w2Benefits = 0;
if (isNaN(w2PtoDays)) w2PtoDays = 0;
// 2. Get C2C Inputs
var c2cRate = parseFloat(document.getElementById('c2c_rate').value);
var c2cExpenses = parseFloat(document.getElementById('c2c_expenses').value);
var c2cUnpaidDays = parseFloat(document.getElementById('c2c_unpaid').value);
var c2cBenchWeeks = parseFloat(document.getElementById('c2c_bench').value);
// Validation / Defaults
if (isNaN(c2cRate)) c2cRate = 0;
if (isNaN(c2cExpenses)) c2cExpenses = 0;
if (isNaN(c2cUnpaidDays)) c2cUnpaidDays = 0;
if (isNaN(c2cBenchWeeks)) c2cBenchWeeks = 0;
// 3. Logic: W2 Value
// Note: We do not subtract taxes here because we are comparing "Gross Equivalent".
// We assume W2 salary is Gross.
var w2TotalValue = w2Salary + w2Bonus + w2Benefits;
// 4. Logic: C2C Value
var standardWorkHours = 2080;
var hoursLostToUnpaidDays = c2cUnpaidDays * 8;
var hoursLostToBench = c2cBenchWeeks * 40;
var billableHours = standardWorkHours – hoursLostToUnpaidDays – hoursLostToBench;
if (billableHours 0) {
breakEvenRate = (w2TotalValue + c2cExpenses) / (billableHours * 0.9235);
}
// 6. Display Results
document.getElementById('results').style.display = 'block';
// Format Currency Function
function formatMoney(num) {
return '$' + num.toLocaleString('en-US', {minimumFractionDigits: 0, maximumFractionDigits: 0});
}
document.getElementById('res_w2_total').innerHTML = formatMoney(w2TotalValue);
document.getElementById('res_c2c_net').innerHTML = formatMoney(c2cNetComparable);
document.getElementById('res_hours').innerHTML = billableHours.toLocaleString();
document.getElementById('res_breakeven').innerHTML = formatMoney(breakEvenRate) + "/hr";
var diff = c2cNetComparable – w2TotalValue;
var diffEl = document.getElementById('res_diff');
if (diff >= 0) {
diffEl.innerHTML = "+" + formatMoney(diff);
diffEl.style.color = "#2ecc71"; // Green
} else {
diffEl.innerHTML = "-" + formatMoney(Math.abs(diff));
diffEl.style.color = "#e74c3c"; // Red
}
// Verdict
var verdictBox = document.getElementById('verdict_container');
verdictBox.className = 'verdict-box'; // reset
if (c2cNetComparable > w2TotalValue) {
verdictBox.innerHTML = "The C2C offer is financially stronger.";
verdictBox.classList.add('verdict-w2'); // Reusing green style
verdictBox.style.background = "#d4edda";
verdictBox.style.color = "#155724";
} else {
verdictBox.innerHTML = "The W2 offer provides better value.";
verdictBox.classList.add('verdict-c2c'); // Reusing yellow style
verdictBox.style.background = "#f8d7da";
verdictBox.style.color = "#721c24";
}
}