Payroll vs Contractor Cost Calculator
Estimate true payroll cost by including PTO and employer payroll taxes, then compare it to contractor fees. Ideal for budgeting and understanding your loaded cost per hour. Estimates only.
Educational only: This tool provides general estimates and is not legal, tax, or accounting advice.
Part of our Employee vs Contractor Guide (true hiring costs, payroll overhead, and misclassification risk).
Tip: If you don’t know payroll tax %, start with a rough estimate (often 10–20%) and adjust based on your jurisdiction and benefits policy.
Total Payroll Cost (Employer): —
Total Contractor Cost: —
Cost Difference: —
PTO Cost: —
Employer Payroll Taxes Cost: —
Loaded Employee Cost / Hour: —
“Loaded employee cost per hour” uses 2,080 hours/year. Adjust your contractor hours to match expected workload.
Deciding which model fits an ongoing role? Try the Contractor vs Employee Cost Calculator.
Get Your Payroll vs Contractor Report
Prefer to read first? Start with the Employee vs Contractor Guide.
Use this calculator to plan budgets, compare employment strategies, and understand the financial impact of hiring employees versus contractors.
What Is Loaded Employee Cost per Hour?
Loaded employee cost per hour is an estimate of what an employee truly costs the business per working hour after including employer payroll taxes, benefits, and paid time off. It can be significantly higher than base hourly wage.
Understanding Payroll vs Contractor Costs
Employees have additional costs such as benefits, paid time off, and payroll taxes that contractors usually do not incur. Contractors are often more flexible, but higher hourly rates and fees can balance the comparison.
Compliance note: Paying someone as a “contractor” doesn’t automatically make them a contractor. If the relationship is ongoing, controlled, and integrated, misclassification can create back-pay and tax exposure. See misclassification penalties & risks or estimate scenarios with the misclassification cost calculator.
This calculator provides a simplified estimate to help business owners and HR managers compare total costs before hiring decisions.