Att'n consultants (esp. Canadian)

[j0ckser]

background
A=my company (registered but not incorporated) sole prop.
B=the company that pays me a portion of rate X
C=the company for whom I do the work; pays B a rate X

query
Is there anything such as a norm re the portion that I get from B? When I first negotiated the aggreement with B, 50% seemed reasonable, but I had only one previous scenario to work from, and had never negotiated my own rate. I am getting the impression that I should/could get up to 85% (i.e., B retains 15%) but have no experience to work from.

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[mrdenny]

It all depends on how the rates are negated. I do side work for a company through another company. Because I was called on a weekend and the client was very desperate I was in a good position when it came to negotiation the rate. I was able to get about 95%.

Typically when doing work through an agency the worker will get between 50% and 60%.

When ever the worker wants a higher rate the agency will usually go to the client and increase the rate proportionally to account for that.

Denny
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[wlemery]

It depends on benefits, W2 vs. 1099, etc. If you're working on a 1099, handling all your own benefits and expenses, the headhunter should get 15% or so to do collections for you. In other words, the client company probably has net-30 terms with the headhunter and might be a slow payer. The headhunter firm retains a team of attorneys that specialize in collections and the client knows this, so the client pays. Now, if you bill the client directly, you get to handle late payments, etc.

At the other end of the spectrum you might be working W2 with benefits (health, dental, etc.), paid holidays, vacation and an expense account. In that case you get 50% to maybe 60%. You never have to worry about getting paid.

I did the 1099 business with a shaky client once, and ended up holding the source code hostage until I had cash in hand, and I mean actual greenbacks. That was probably the smartest move I made that year.

 

[mrdenny]

Since the OP is in Canada not the US...

W2 is the US IRS form for employees of the company. The employer pays 1/2 of the employees federal and state income tax when this form is used.

1099 is the US IRS form for contracters. The contracter is responsible for 100% of the federal and state income tax.

Everyone in the US simply uses the IRS form names to designate if the job is a direct hire position (W2) or a consulting position (1099).

Denny
MCSA (2003) / MCDBA (SQL 2000)
MCTS (SQL 2005 / Microsoft Windows SharePoint Services 3.0: Configuration / Microsoft Office SharePoint Server 2007: Configuration)
MCITP Database Administrator (SQL 2005) / Database Developer (SQL 2005)

My Blog

 

[lespaul]

Technically, it's 1/2 of Social Security and Medicare. Both the employee and employer pay about 6.2% of gross wages for SS and about 1.45% of gross wages for Medicare on wages up to around $90,000...once you earn more than that you no longer have SS and Medicare deducted from your check and your employer doesn't have to pay their 1/2 either...

And while the 1099 worker is taxed the entire percentage, a credit is given for the 1/2 that an employer WOULD have paid (line 27 Form 1040) and your gross income is adjusted downward by that amount...

State and Federal taxes are paid completely by the employee.

Leslie

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[lgarner]

Simple. Renegotiate.

However, anyone who negotiates for anything needs to have a firm position, and your "impression" that you could get more isn't one. Try to get some facts concerning the payouts that other contractors for the same firm are getting.

Second-best would be information about other contractors in general. Networking is good for this.

 

[j0ckser]

thanks for the replies. obviously i left some stuff out. my rate is all inclusive - i invoice for my time and pay everything - no benefits, no tax breaks.

also the company that i work through (B) isn't a headhunter per se. company C needed someone to do what i do, and they searched and found me. they have about 100 employees working at company C.

for those from the US (wlemery & lespaul), thank for trying, but nothing you mentioned fit my situation and to boot the jargon is very confusing. mrdenny thanks for helping to make sense of it.

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