Key Takeaways
Suppose you receive an email from a recruiter presenting different rate ranges for a business system analyst contract opportunity. In that case, you would likely ask yourself if going 1099/c2c is worth the extra money.
This article will examine the potential income differences as 1099 vs W2 vs C2C contractor.
For today’s example, we’ll examine an email I received years ago. We’ll assume that the highest rate is taken for each range.
Income Comparison
There are 2 ranges available 1099/C2C and W2. As you can see C2C/1099 tends to pay more money generally.
This example is to be taken for illustrative purposes to highlight tax savings, but these numbers may look different for the respective state you live in.
| W2 | 1099 | C2C | |
|---|---|---|---|
| Contract Rate | $70 | $85 | $85 |
| Salary (70%) | $120k | ||
| Earnings paid as Dividends (30%) | $50k | ||
| Estimated Yearly value (Rate * 2) | $140k | $170k | $170k |
| Estimated Taxes (Fed, State, SE (if applicable)) | -$47k | -63k | -49k |
| Net Income | $93k | $107k | $121k |
One item not captured in this chart is some of the business expense and tax deductions which would be applicable to both 1099 and C2C contractors.
Regardless the S-Corporation is the victor in terms of highest net income. It’s for each contractor as they’re evaluating opportunities to determine if the net income is worth the opportunity.
Detailed Calculations
In order to estimate taxes for each type of arrangement we utilized several free websites which can be helpful in your journey.
Simplified W2 vs C2C Contract Rate Calculator
If you are more experienced and need a more accurate calculator, we’ve created an estimated calculator to give you an opportunity.
Calculator Resources
S-Corp Estimated Savings Calculator
What is a Business System Analyst & why do some get paid a lot of money?
Okay, imagine you have a big toy factory. A Business System Analyst is like a superhero who helps the workers and the boss understand how to make the toys better and faster.
They talk to everyone, listen to what they need, and then use their special skills to plan and fix things so the toy factory works smoothly.
Now, why do some Business System Analysts get lots of money? Well, it’s because they are like the best toy-making superheroes! When a toy factory really needs their special skills, they might ask them to come and help for a short time.
These superhero analysts are so good at their job that they can go to different toy factories and help them too. Because they’re like superstars in their work, toy factories are happy to pay them more to make sure their toys are the best!
What sectors are best to get in as a business system analyst?
Choosing the right sector as a Business Systems Analyst (BSA) largely depends on your interests, skills, and industry trends. However, certain sectors consistently offer robust opportunities for BSA roles. Here are five sectors that are often lucrative for business system analysts:
Sectors
- Finance and Banking: The finance sector, including banks and financial institutions, heavily relies on complex systems for transactions, risk management, and compliance. Business System Analysts play a crucial role in ensuring these systems are efficient, secure, and compliant with regulations.
- Healthcare: The healthcare industry is rapidly adopting technology for electronic health records, patient management, and data analysis. BSAs in healthcare work on optimizing these systems, improving interoperability, and ensuring compliance with healthcare regulations like HIPAA.
- Information Technology (IT) Services: IT services companies provide a range of solutions to clients across various industries. BSAs in this sector work on diverse projects, from software development to system integration, offering exposure to different technologies and industries.
- E-commerce and Retail: With the growth of online shopping, e-commerce companies require robust systems for inventory management, order processing, and customer relationship management. BSAs in this sector focus on enhancing the efficiency and user experience of these systems.
- Telecommunications: In the telecommunications sector, BSAs contribute to the development and improvement of systems related to network management, customer billing, and service provisioning. The evolution of 5G technology and increased connectivity continues to drive demand in this sector.
