Articles & News About Jobs & Employment

Self-Employment: Do you know the Difference between Rates and Wages

The difference between rates and wages is not always clear to newly self-employed people and their wage-earning clients.

Both look similar on the surface; both are expressed in dollars and cents per hour. But they each represent something very different.

Wages are the payment a worker receives for his labor.

Rates are the payment a business receives for performing a serivce to a client. In addition to the labor used in performing that service, rates must cover the business's overhead.

Because of that, rates have to be higher than hourly wages earned by employees for comparable work.

Most newly self-employed workers are former employees. They are accustomed to receiving pay based on wages. Because they don't understand the difference between rates and wages, when they start out, they tend to set their rates too low.

To survive, your rates must be high enough to pay the bills and enable you to earn a living.

Some of the differences between a self-employed person's rates and an employee's wages are explained below.

WAGES

If you are a wage earner, you are due an hourly wage just by being present and willing to work at a set time, for the period of time demanded by your employer.

Your wage is the payment for your labor.

The employer supplies the necessary equipment and supplies for you to do the work. And, the employer supplies your workplace.

You enjoy all of the legal and social protections due to employees such as Unemployment Insurance, and employer paid Worker's Compensation Insurance.

Most full-time employees enjoy fringe benefits. These range from paid vacation and sick days, subsidized health insurance, retirement benefits, etc. to stock options and more to higher ranking employees at larger companies.

RATES

As a self-employed service provider, you receive income based on your billable hours, that is, time spent on performing services for your clients.

You furnishes your own supplies. Unless the service is one that is performed off- site, you supply your own workspace.

You have to equip yourself to be in business and provide your services: You must procure and equip your workplace, invest in skill and product development, market your services, purchase business insurance, and handle billing, recordkeeping and collections.

As a business owner you take on a great deal of risk. It is reasonable, and expected, that your rates should allow for a reasonable profit over and above your expenses and salary.

The above is true for any business. Below are additional costs you pay because you are self-employed.

Unlike most of your employed counterparts, there is no employer subsidy for your health insurance. And, as an individual, your costs will be higher than they would be as part of a larger organization.

Aside from Social Security, you are totally responsible for your own retirement nest egg.

You will pay both the employee's and the employer's share of the FICA tax burden (15.3%); double the burden that falls upon your employee counterparts. The IRS allows limited deductions for this tax, but your net share is still far higher than for your employed counterparts.

But you can only bill for services rendered.

The upshot is that as a self-employed service provider you must cover many expenses that employees do not. Therefore you should have no qualms about charging an adequate rate to cover your expenses and make a living.

Ellen Zucker's site, http://www.selfemployment101.com, has articles and resources to help the creative sole-proprietor earn a living and create a life.

Have Ellen's articles directly sent to your inbox. Subscribe to The Self-Employment Lady.

Other Article Sites

findabook.com  moneycd.info  a-mortgage.info   about-lemon-laws.info  aboutstudentloans.info
all-about-publishing.info  auctions-articles.info  bestcollege-university.com  bestispconnection.com
biblefolder.com  blogger-website.com  books-used.info  brokers-guide.info  buywindows.info  cable-dsl.info
career-miner.com  carpel-tunnel.info  cashinaflash.info  cashloanreviews.info  casinobell.com  chat-house.info
clearmycredit.info  collegeloantips.info  crones.info  depression-articles.info   dirnic.net  dishguides.info
divers-below.com  expodog.info   financewizz.com  fire-insurance.info  getgood.info  handleit.net   it-idea.info
health-supplies.info  hosting-right.com  insidealert.com  insurance-facts.info  jobs-employment.info
justgood.info  lookgold.net   lowcost-travel.info  money-source.info  myhostzone.info  numisblog.com
peoplesearchfinder.info  pr-articles.info  realeas.com   refinancing-guides.info  spyware-remove.info
telelot.info  the-law.info   toppaid.info  travel-deals.info  travelcorrect.com  wedding-guide-site.com
your-blog.info  your-credit.info

Legitimate Work At Home Jobs - Become Wealthy Working From Home
It all started when I was franticly going from company to company passing out my resume, needing a job so bad it hurt I had a college degree but could not get hired no matter what for the life of me

Job Work From Home On My Computer
In my long quest for a job, work from home on my computer seemed to be the best available option Especially, since I needed to work around the many schedules of my family

Work at Home Data Entry Jobs Career Are Available Now
Work at home data entry jobs career allow you the freedom to spend more time with your family It is perfect employment for someone who is looking for a job they can control themselves

Work From Home - How To Prepare For A Work From Home Job
Surely, you must have already heard about the perks of working from home Not only do you get the opportunity of being with your loved ones, but also the chance of earning good money doing what you like

4 Legit Work From Home Jobs That Work
Everybody is turning to the internet to work from home and hopefully leave their day job. This means that finding legit work from jobs has become more popular than ever and you can understand why when hundreds of people weekly are quitting their day job and are working out of the comfort of their home.

Legitimate Work From Home Jobs - 4 Important Things to Consider Before Starting This Career Path
When you are selecting legitimate work from home jobs career, money is important, but there are some other factors that should be considered before making the final decision Before beginning even legitimate work from home jobs career, you should think about some of the factors that will help to make your venture succeed or fail

Work at Home Businesses Versus Work at Home Jobs
Is a work at home business better than a work at home job? You bet. Hands down. But each option has pros and cons. It may be that for right now you're just not ready to start a work at home business. Its a big committment. That's OK. But if you're dedicated, smart and willing to work harder than most, settling for a work at home job could be selling yourself short.

On Campus Interviews - A Chance For Your "First Job" As Well As Career Employment
During the course of training or secondary educations some organizations - companies, firms as well as major non-profit organizations of great status and reputation will offer campus interviews to graduating students in such fields as engineering, electronics, business management, law accounting, computer information systems and marketing

Legitimate Work at Home Jobs Career - 4 Amazing Tips to Increase Efficiency
When you have picked one of the many legitimate work at home jobs career and are ready to settle down and make some money, it helps to make your home based business as efficient as possible One of the most important benefits resulting from obtaining legitimate work at home jobs career is the ability to improve income levels through increased efficiency in performing the tasks associated with the jobs

7 Benefits of Owning a Computer Work at Home Job
Computer work at home jobs are growing in numbers Some cost very little to start-up and others are completely free to start

Work At Home Job Versus Work At Home Business
I often hear people complain about how they shouldnt have to pay for a business opportunity because "you wouldnt have to pay to get a job outside the home." It irritates me when I read that. Not because I think you should have to pay for a job - even a work at home position - its because they think that their should be no investment to start up a work at home business.

2 Major Reasons to Get a Computer Work at Home Job
It surprises me how many people are still skeptical about putting their computer to work Thousands of people earn work at home incomes via the internet

Work at Home Agent - Job Ideas For a Work at Home Agent
Are you interested in jobs that require you to spend hours on the phone talking to customers If you like personal relations work and have good interpersonal skills, then do consider the opportunity of being a work at home agent

Home Computer Work - 3 Ideas For Home Computer Work Jobs
Surely, many people out there have told you about the wonders of working from home and being your own boss Well, not only are you able to save on transportation costs and have more time to spend with your family, you are also able to do whatever you like, whenever you feel like it