Why You Need a Corp to Corp vs W2 Calculator

You are a senior IT consultant or software engineer. A recruiter calls with two options for the same contract: "We can do W2 at $75 per hour, or we can do corp to corp (C2C) at $95 per hour." On the surface, the C2C rate looks like a $20 per hour premium. But corp to corp vs W2 is not a simple comparison. The C2C arrangement comes with a completely different tax structure, more overhead, and significantly more risk. Without a corp to corp vs W2 calculator, you cannot know which option actually puts more money in your pocket.

This guide breaks down exactly how to compare corp to corp vs W2 arrangements, including the tax advantages of running your own S-corp, the costs of payroll and compliance, and the break-even rate where C2C beats W2. Use our 1099 vs W2 Calculator to run your own numbers, and read on for the C2C-specific analysis.

What Is Corp to Corp (C2C) Contracting?

Before we run the numbers, we need to define what corp to corp vs W2 actually means. In a corp to corp (C2C) arrangement, you form your own corporation (typically an S-corp) and that corporation contracts directly with the client or a staffing agency. Your corporation invoices the client, and you pay yourself a salary and distributions from your corporation. In a W2 arrangement, you are an employee of the staffing agency — they handle payroll, withhold taxes, and pay their share of FICA.

The key difference when comparing corp to corp vs W2 is that as a C2C contractor, your corporation pays you a reasonable salary (subject to FICA taxes) and the remaining profit flows to you as distr...