While I’m not doing a lot of consulting right now, I just ran across something interesting when talking to a recruiter the other day. He was asking me about my rates and referenced a number of terms that I actually didn’t understand. This blog post is my attempt to tease this out and understand it a bit more.
Traditionally I find an engagement and bill the client directly on a 1099 basis, easy peasy. This recruiter specifically stated that his customer, the company I would ultimately work for, would not do 1099 at all. The “rationale” was that they don’t want any IRS issues with “is this person really an employee?”. Given the myriad issues with 1099s and the way that companies have abused it, I can understand the caution. He proceeded to ask me if I was “C2C” and apparently this means “Company to Company” and can be translated as “Do you have a corporate entity of your own that you can bill through?”.
When I stated that I wasn’t C2C he then asked me for my “W2 rate” and this apparently means “Our hiring agency can actually employ you on a w2 basis”. The reason that he asked for a different rate was to cover the employment taxes. Since he claimed the employment tax amounted to 7.5%, I simply took my normal billing rate and discounted it by 7.5%. Had I not earlier told him my normal billing rate then I would have added the 7.5% to my billing rate. Sigh.
Hopefully this is useful to someone out there. If not at least this will be a place where I can find it in the future…