Are there any guidelines on (e.g. a percentage rate) how to calculate between a hourly rate for working under W-2 vs. corp-to-corp/1099?

The reason for my question is that I recently applied for an IT consultant role and initially told the company I would like to work under corp-to-corp. I later received from them an email detailing the liability insurances they want me to have if I want to work under corp-to-corp.

Since the insurances are potentially expensive, they offered me to work for them under W-2 instead and asked what would my W-2 rate be.

Here I would like to understand if there are common expectations on how large (or small) the differences between the corp-to-corp and W-2 rates would be.

Are there guidelines on how to set ones W-2 rate vs. corp-to-corp/1099 rate on the IT-market? I mean, is it typical to set corp-to-corp rate X percent higher than W-2 rate?


1 Answer 1


I don't think there are "industry guidelines" in these cases. When I worked for a contract house under a 1099 (corp-to-corp), they were taking 23%* of the rate they were getting from the client company. W-2 "employee contractors" will typically only receive 60% of the rate (the contract house takes 40% or sometimes more).

It all depends on the contract house and their overhead, and how much you (as the contractor) are aware of these practices and how well you can negotiate with the recruiter.

*This information was not disclosed to me on purpose. I happened to see an invoice from the contract house and noted the rate I was being billed out at. These sorts of things are rarely discussed openly.