Employee vs. Contractor Cost Calculator

How to compare costs

Enter comparable annual compensation, employer payroll taxes, benefits, insurance and other employer costs, then compare the total with a contractor’s quote for the same scope of work. Use your actual Texas unemployment rate and realistic benefit assumptions where the tool asks for them.

Example scenario

Compare a $50,000 annual employee salary plus $5,000 of benefits with a $60,000 contractor quote for the same work. Add the applicable employer payroll taxes and other costs through the calculator. Vary the benefits and quoted fees to see which assumptions drive the difference. These input amounts are illustrative, not a recommendation.

Classification comes before cost

The working relationship determines worker status. The IRS considers behavioral control, financial control and the relationship of the parties. Payment by invoice, a contract or a 1099 alone does not settle classification. This tool compares costs; it does not make a legal or tax classification decision. Federal and Texas requirements may differ.

CPA help and official sources

Weidner CPA helps Texas business decision-makers connect hiring budgets with bookkeeping, tax planning and business advisory. See IRS Topic 762: Independent contractor vs. employee and the Texas Workforce Commission’s classification guidance.

Published by Weidner CPA. Firm principal: Edward Weidner, CPA. Updated 2026. Educational cost estimates only.