Consulting engineers pay their own taxes

  • Although employees are taxed according to their income, the company hiring them takes charge of the management and payment of taxes; the same can not be said of consultants, who must pay their taxes personally and must, therefore, include them in their hourly rate. Hiring an engineer as a permanent employee may seem less expensive in terms of net hourly wages, but consider that taxes generate two additional costs for companies:

    Pay the taxes themselves.

    Engineering consulting services administrative costs associated with the calculation and filing of taxes, as well as the costs of processing payments.
    Keep in mind that the United States has tax brackets with rising rates based on income. For example, 2016 tax rates for single professionals start at 10% for first income of $ 9,275 or annual income, going through various tax brackets, up to 39.6% for all incomes exceeding $ 415,050. Highly experienced consultants require higher rates because of the expertise they bring to the companies, but the fact that taxes represent a higher percentage of their income also plays a role.

    Taxes applicable to consulting engineers in the United States include federal income tax, state income tax, social security tax, and health insurance. There are also taxes specific to cities; For example, New York City applies the unincorporated business tax for independent professionals.