Suppose you receive an email from a recruiter presenting different rate ranges for a contract opportunity. In that case, you would likely ask yourself if going 1099/c2c is worth the extra money.
This article will examine the potential income differences as 1099 vs W2 vs C2C contractor.
Before you read the article, if you are not familiar with the terms, then I would recommend you start by reading How to Understand the Difference between C2C vs 1099 vs W2 IT contractor roles?.
Key Takeaways
- C2C contractors generally will make the most money post-taxes but require more effort.
- The simplified w2 vs C2C contract rate calculator can provide you with an estimate within 60 seconds
Simplified W2 vs C2C Contract Rate Calculator
If you are more experienced and need a more accurate calculator, we’ve created an estimated calculator to give you an opportunity.
Income Comparison
For today’s example, we’ll examine a product owner role I received recently. This role is on the lower side and likely targeted for someone with 3 years of experience.
There are 2 ranges available 1099/C2C and W2. As you can see C2C/1099 tends to pay more money generally.
| W2 | 1099 | C2C | |
|---|---|---|---|
| Contract Rate | $48 | $58 | $58 |
| Salary (70%) | $81k | ||
| Earnings paid as Dividends (30%) | $35k | ||
| Estimated Yearly value (Rate * 2) | $96k | $116k | $116k |
| Estimated Taxes (Fed, State, SE (if applicable)) | -$30k | -45k | -28k |
| Net Income | $70k | $71k | $88k |
This example is to be taken for illustrative purposes to highlight tax savings, but these numbers may look different for the respective state you live in.
An extra $18k for the same amount of work is not too bad.
One item not captured in this chart is some of the business expense and tax deductions which would be applicable to both 1099 and C2C contractors.
Regardless the S-Corporation is the victor in terms of highest net income. It’s for each contractor as they’re evaluating opportunities to determine if the net income is worth the opportunity.
Detailed Calculations on 1099 vs C2C vs W2
In order to estimate taxes for each type of arrangement we utilized several free websites which can be helpful in your journey.
S-Corp Estimated Savings Calculator
What is a Product Owner & why do some get paid a lot of money?
The Product Owner is a bit like the person who decides what cool new features your toy should have and how it should work. They talk to you, your friends, and even your parents to understand what everyone wants from the toy.
So, let’s say you and your friends want the toy to light up, and your parents want it to be safe. The Product Owner takes all these ideas and decides the most important things to add. They make a list, and then they work with the toy makers (like engineers and designers) to bring those ideas to life.
In the end, the Product Owner makes sure the toy is super awesome and exactly what everyone wanted. They’re like the captain of a toy-making ship, steering it to create the best toy for everyone to enjoy!
What sectors are best to get in as a business system analyst?
Choosing the right sector as a Product Owner largely depends on your interests, skills, and industry trends. However, certain sectors consistently offer robust opportunities for product owner roles. Here are five sectors that are often lucrative for product owners:
Sectors
Product Owners are in demand across various sectors as companies recognize the importance of effective product management to stay competitive and meet customer needs. Here are some sectors where Product Owners are commonly needed:
- Technology and Software: This sector often has a high demand for Product Owners to oversee the development of software products, applications, and tech solutions.
- E-commerce and Retail: Product Owners play a crucial role in developing and improving online platforms, enhancing user experience, and managing product portfolios in the e-commerce and retail sectors.
- Financial Services: Banks, insurance companies, and fintech firms seek Product Owners to lead the development of digital banking solutions, financial software, and innovative products.
- Healthcare: The healthcare industry is increasingly adopting technology, and Product Owners are needed to manage the development of health information systems, telemedicine platforms, and digital health solutions.
- Manufacturing and Industrial: In sectors like manufacturing, Product Owners are involved in creating and improving products, from physical goods to industrial machinery and equipment.
- Telecommunications: With the evolution of telecommunications technology, Product Owners are instrumental in developing new services, mobile applications, and network solutions.
- Automotive: Automotive companies often hire Product Owners to lead the development of in-car technology, connected services, and other innovative features for vehicles.
- Education Technology (EdTech): The education sector increasingly relies on technology, creating opportunities for Product Owners to drive the development of educational platforms, e-learning tools, and student-focused applications.
- Energy and Utilities: Product Owners are involved in developing software solutions, smart grids, and technologies that enhance efficiency and sustainability in the energy and utilities sector.
- Consumer Goods: Companies producing consumer goods hire Product Owners to lead the development of innovative products, manage product lifecycles, and improve overall product strategy.
The demand for Product Owners is not limited to these sectors, and many industries recognize the value of skilled professionals who can effectively manage and deliver successful products. As businesses continue to prioritize digital transformation and customer-centric approaches, the role of the Product Owner remains crucial across diverse sectors.