How do I convert my salary to a freelance rate?

Divide your annual salary by 2,000 (standard work hours), then multiply by 1.3-1.5 to account for self-employment taxes, benefits, and unpaid time off. For example, a $80,000 salary would translate to roughly $52-$60/hour as a freelancer.

What benefits should I factor into the comparison?

Key benefits to consider include health and dental insurance, vacation pay (typically 4-6%), employer CPP contributions, retirement plan matching, sick days, equipment allowances, and professional development budgets.

Is freelancing more expensive tax-wise than employment?

Yes, freelancers pay approximately 6% more in CPP contributions since they cover both employee and employer portions. However, freelancers can also deduct business expenses, which can offset some of this additional cost.

How many billable hours should I assume per year?

Most freelancers bill between 1,000 and 1,500 hours per year. The remaining time goes to administration, marketing, professional development, and time off. A common assumption is 1,200 billable hours for realistic planning.

Freelance vs Full-Time Salary Converter

Compare freelance rates to full-time salaries. See the true cost difference accounting for benefits, taxes, and self-employment costs.

Freelance vs Salary Converter

Freelance Rate vs Full-Time Salary: What You Need to Know

Comparing a freelance hourly rate to a full-time salary isn't straightforward. Freelancers must account for self-employment taxes, benefits they need to purchase themselves, unpaid time off, and business expenses that employed workers don't typically face.

Why Freelance Rates Are Higher Than Salaries

Self-employment taxes: Freelancers pay both the employee and employer portions of CPP, adding roughly 6% to their tax burden.
Benefits costs: Health insurance, dental coverage, and retirement contributions can cost $5,000-$15,000 per year.
Unpaid time: Vacation, sick days, and statutory holidays amount to 25-35 days per year that freelancers don't get paid for.
Business expenses: Software, equipment, accounting, and insurance are costs employees rarely consider.

The Rule of Thumb

A common guideline is to multiply your desired salary by 1.3 to 1.5 and divide by 2,000 billable hours to get your minimum hourly rate. However, this varies significantly by province due to different tax rates and benefit costs across Canada.

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Freelancing in Focus: A Snapshot of the Canadian Scene

Considering the freelance route or looking to hire talent in Canada? Dive into these compelling statistics about the world of freelancing, both globally and in the Great White North!

58 MillionFreelancers in the United States: Over 58 million people around the US have chosen the freelance lifestyle.

34%Canada's Freelance Force: 34% of the Canadian workforce is made up of freelancers and independents, showcasing the nation's shift towards flexible employment.

$80,000Average Annual Income: Freelancers in Canada earn an average of $78,000 annually, indicating the lucrative potential of independent work.

4.1/5Freelancer Contentment Score On average, full-time freelancers give their job contentment a rating of 4.1 out of 5.