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How Much Should IT Contractors Charge?

How Much Should IT Contractors Charge?

(Source: Creative Commons)

John Rossheim | Monster Senior Contributing Writer

You Will Incur Business Expenses

Most business expenses are deductible, but they do cut into your bottom line. Before you make the leap to becoming an IT contractor, do your best to estimate expenses that will ultimately come out of your hourly rate. The variety of business expenses is limitless; we cover the basics here.

First, consider business startup expenses:

  • Computer hardware and software.
  • Office equipment and furniture.
  • Business stationery and marketing materials.
  • Web site programming and design.
  • Initial inventory, if applicable.

Second, try to gauge your ongoing expenses, such as:

  • Marketing and advertising.
  • Car and other business travel.
  • Business entertainment.
  • Telecommunications services.
  • Accounting, legal and other professional services.
  • Professional books, subscriptions, memberships.
  • Payments on business debt.

What Do You Do Now? Go Figure

Once you’ve done your homework and made your best estimates of all the applicable items above, get some professional help to put it all in perspective. See an accountant or financial planner specializing in helping small businesses. Let your advisor crunch the numbers and come up with an hourly rate that you should charge based on your estimate of billable hours per year.

Then compare this hypothetical rate to the open market’s going rates. “You need to charge what the market will bear,” says Rosen. “If you’re going to make a mistake, err on the side of charging too much.”

Wiser words were never spoken.

This article originally appeared on Monster Career Advice.

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