Contractor vs employee calculator (2026)

As an incorporated contractor billing 35 hours a week for 46 weeks with $5,000 of overhead, you need about $76.99 an hour to match the $107,000 employee role: the same $79,003 a year of cash take-home plus the $6,000 of health coverage bought back out of pocket. That is a 50% load over the employee hourly equivalent of $51.44 an hour. At the $85 an hour from the original discussion, the contractor keeps $92,542 a year, which is $13,540 more than the employee role in cash terms.

Four things stack up. First, the contractor pays both CPP halves instead of one. Second, only billable hours pay: 35 hours a week for 46 weeks is 1,610 paid hours against 2,080 for the employee. Third, overhead comes out of billings before tax. Fourth, the employee's health coverage and pension match have to be replaced out of pocket. The loaded percentage is the single number that rolls all four together.

At the same $85 an hour, 35 hours a week for 46 weeks in Ontario, the incorporated salary-draw route keeps about $92,542 a year while the sole proprietor route keeps about $92,297 a year. The difference comes from how CPP is charged and from the corporation absorbing the employer CPP half before the salary is drawn. Incorporated mode here assumes you pay yourself entirely as salary; dividend strategies are not modeled and can change the answer.

Generally no. Employment of a person who controls more than 40% of the voting shares of the corporation is not insurable employment under the Employment Insurance Act, so no EI premium is charged on the incorporated side and no EI eligibility builds up. Sole proprietors are in the same position by default, unless they opt into EI special benefits, which this tool does not include.

Not modeled, deliberately. Dividends are taxed differently from salary (gross-up and dividend tax credit, eligible versus non-eligible), and the right mix depends on corporate income, personal income and province. Modeling it badly would be worse than flagging the gap. Treat the incorporated result as the salary-draw case only.

Fewer billable hours means each hour must carry more of the year. To match the same $107,000 Ontario role at 46 billable weeks, you need about $89.83 an hour at 30 billable hours a week versus about $67.37 an hour at 40. Billable hours are the biggest lever in the whole comparison, bigger than the tax rate.

Once taxable billings pass $30,000 over four consecutive quarters you must register and charge GST/HST on top of your rate. HST is tax you collect for the government, not income, so it is not in this calculator. Most business clients recover it as an input tax credit, so it usually does not change the comparison.