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 http://www.selfemployment101.com.

same day cleaning service Bannockburn ..
In The News:

Google is making a push to ensure its AI, Gemini, is tightly integrated with Android systems by granting it access to core apps like WhatsApp, Messages, and Phone.
A new green energy system is set to change how we capture clean power, and it all starts with the ocean. French startup Seaturns has designed technology that taps into the natural motion of the sea.
Cybersecurity researchers are warning that hackers have started exploiting flaws in chatbots to carry out AI phishing attacks.
Google has just made it easier than ever to regain control of your inbox with Gmail's new Manage Subscriptions tool.
Despite the benefits, residential power saver programs come with several potential drawbacks and concerns that have been raised by both customers and experts.
The Blackdot AI tattoo machine is quiet. It's steady. And according to early users, it hurts a lot less.
Attackers have started to exploit the very signals that users assume will keep them safe when it comes to add-ons to improve productivity or entertainment.
Located on Cerro Pachón in Chile, the world's most powerful digital camera is set to transform how we see the universe.
The innovative DQ Tower stands 28 feet tall with 420 square feet of living space, featuring floor-to-ceiling windows and premium amenities in a prefabricated design.
A new mmWave imaging system allows warehouse robots to scan and create 3D models of objects inside sealed containers, potentially revolutionizing shipping processes.
Family fraud endangers seniors when relatives exploit their trust, but removing personal data online and monitoring identity can prevent financial harm to aging parents.
A study analyzing 500,000 customer service interactions shows chatbots struggle with complex issues while human agents excel at matching customer communication styles.
Aigen's Element robot uses solar power and AI to provide farmers with a sustainable alternative to herbicides, working efficiently in cotton and soy fields.
The new Tesla Oasis Supercharger features 11 megawatts of solar panels and 39 megawatt-hours of battery storage, making it one of the largest solar-powered EV stations worldwide.
Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents now and for the future.
Cybercriminals accessed Medicare data of more than 100,000 Americans by creating fraudulent accounts, prompting CMS to deactivate accounts and issue new Medicare cards.
China's battery swap technology from CATL lets electric vehicle owners exchange batteries in under two minutes, with plans to expand to 1,000 stations across 31 Chinese cities by 2025.
Analysts at Silent Push have uncovered a widespread scam that uses counterfeit retail websites to steal the credit card information of online shoppers.
Chrome users need to update their browsers immediately as Google addresses a critical vulnerability that hackers are actively exploiting. Additional security measures are recommended.
A study found teens glance at phones for dangerous two-second intervals while driving, using devices primarily for entertainment, texting and navigation despite crash risks.
Security researchers uncovered a flaw in Windows 11 that allows attackers to disable Secure Boot using Microsoft-signed tools, requiring manual updates to protect against bootkits.
Carnegie Mellon's noninvasive brain technology allows users to move robotic fingers by thinking about the motion, offering new possibilities for people with motor impairments.
Multi-factor authentication (MFA) adds an extra layer of protection to your accounts. Instead of relying only on a password, MFA requires you to verify your identity using two or more methods.
Scientists from Duke, Harvard, and the University of Otago have unveiled a game-changing tool called DunedinPACNI. It uses a single AI brain scan to reveal how fast a person is biologically aging.
A disturbing wave of fake agent phone scams is sweeping across the United States, catching people off guard and draining their savings.

Tips on Setting Up Your Small Business Bank Account

One of the first things you will need to set... Read More

10 Ways to Start a Business on a Budget

If you've been thinking about starting a business, but are... Read More

Advertising - For Small Businesses (Part 2)

How to do itPeople skim through newspapers and magazines and... Read More

Pressure Washing Companies; Pricing Dock and Deck Cleaning

If you own a Pressure Washing Company and wish to... Read More

5 Steps To Success for Small Business Owners

Everyone wants to succeed in life. Most people want to... Read More

Four Reasons Why Small Businesses Succeed (or Fail)

The American system of business management has been admired and... Read More

Restaurant Operators - What Skills do you Need

A tongue-in-cheek look at the skills required to operate a... Read More

Why The Carwash Industry is Stagnant; What You Can Do to Change Your Field

Many years ago, I had warned the carwash industry of... Read More

How to Protect Yourself & Your Business

As a business owner, you already know how important it... Read More

Increase Sales in Your Home Business With These 10 Simple Ideas

Every home business has the same problem of how to... Read More

How to Compete with the Big Guns?!

Many small business startups fail within the first 2 years... Read More

Is This The Way Its Always Been Done?

Let's face it, we all tend to get stuck in... Read More

The 5 Habits of Highly Successful Small-Business Owners

Have you ever wondered what the difference is between a... Read More

More Business Card Uses

Why would you use an event pass?Event passes are often... Read More

Cleaning Grain Silos, Towers, Containers, and Combines

If you run a pressure washing company in a rural... Read More

Book Yourself Solid Key #5: Go Forward With Gusto & Articulate What You Do

Want your small business to flip instead of flop?! Statistically... Read More

More Business Card Marketing

If you are worried about how many different business cards... Read More

Using Technology to Manage Customer Loyalty

Don't let your customer satisfaction research initiative collect dust on... Read More

Hiring A Virtual Assistant Can Help Your Business Grow

Are you a home or small business owner and you're... Read More

Pressure Washing Heavy Equipment

One of the best ways to make money in the... Read More

Mobile Car and Truck Washing Vehicle Placement

To maximum potential profits and dollars in a mobile washing... Read More

5 Tips for Hiring a GREAT Bookkeeper

Bookkeeping?the "dreaded" word is something we all have to worry... Read More

Tell Me The Reasons Why I Should Believe You?

Have you ever heard the phrase, 'PREPONDERANCE OF PROOF'?I recently... Read More

Advertising - For Small Businesses (Part 1)

Is it right for you?If you decide to advertise your... Read More

6 of 1, Half Dozen of the Other

Motivational author and speaker Jim Rohn says that for a... Read More

housekeepers near Deerfield ..