Skillserv

Frequently Asked Questions

How does Skillserv protect my password?

Skillserv doesn't use secure connections because we don't conduct commerce on this site. However, password protection is still very important. So before we send your password to our servers, we perform a 'one-way' transformation called a 'hash'. That way, if a bad guy intercepts your user information, all they see is the hash--40 characters of gooble-de-gook. It also protects your password in our database. If someone were to break into my hosting company and walk off with the database, they get exactly nothing .

Aren't benefits supposed to be worth about a third of my compensation?

Yup. That's the conventional wisdom, and the reason for it is that most job sites figure vacation as a benefit, a situation that makes my calculations much harder to perform. The way I deal with this is to take a contractor's perspective that says that I only calculate my salary based on my actual number of productive hours. For a fulltime job, this is the number hours you work in a year minus my paid holidays and vacation. Doing it this way normalizes for the fact that contractors usually take their vacations during 'downtime', but it also makes the total compensation for benefits look a bit lower.

Don't worry. The rate calculations are still correct.

What should I enter for productivity?

Simply enter the weeks or hours that you expect to work in a year. For contractors, a good rule-of-thumb is about 44 weeks--52 weeks per year minus 10 national holidays (in the US), 3 weeks of vacation and 3 weeks of hunting for gigs. (Your mileage may vary.)

How does 'Marginal Tax' affect the calculations?

Most of the items in the Expenses section are items that are taken out of your compensation pre-tax, at least when you're working fulltime. So basically your employer is giving you free money when they cover your medical or let you participate in a 401K. When you contract, you pay for these with 'post-tax' money. So you're paying both the tax and the cost.

The 'Marginal Tax Rate' is your highest federal tax bracket--the bracket that defines how much money you get back when your employer covers these expenses. So I calculate the value of the benefit as the cost plus the cost multiplied by the marginal tax rate.

What other expenses should I add to my rate or salary calculation?

This is a hard question to answer because it varies so much from state to state. Some of the things you could add include: Dental benefits, commuter benefits (In Northern California we get rebates for taking public transit.), disability insurance. In short, anything that would come out of your compensation pre-tax if you were working fulltime.

What does 'Configure for 1099' mean?

This option sets up the calculator as if you're working as a "sole-proprieter". In other words, you are your own employer and are covering all your own benefits and taxes. You'll notice that the check boxes for the employer's portion of Social-security and Medicare are turned off when you use this option, indicating that you have to cover these yourself.

What does 'Configure for Contract W2' mean?

This option sets the calculator to treat you as a "W2 contractor". In other words, a direct employer or agency has you on their payroll but isn't paying you any benefits. They will, however, cover the employer's portion of Social-security and Medicare. You'll notice those two check-boxes get turned on when using this option.

What does 'Configure for Corp-to-corp' mean?

Use this option when you want the calculator to treat you as if you have your own company. Regardless of whether you are working a contract for an agency or a direct employer, you cover all your own benefits and taxes. So none of the boxes get checked. This option is essentially the same as the 1099 option.

What does 'Configure for Fulltime' mean?

This is sort of a 'what if?' scenario. "What would my salary and benefits look like if I was employed fulltime?" Use this option if you want to get a sense of what benefits are worth, keeping in mind that my calculators treat vacation and holidays a bit differently than the conventional wisdom suggests.