Payroll services: how to calculate your salary?
Do you want to be independent? If you are tempted by an umbrella company / freelance portage, you would certainly like to know what is the pay level. How to calculate your Average Daily Rate (ADR)? How to deduct your net salary? How to estimate your final turnover? What criteria should be taken into account in the calculation of your salary? These are some of the questions we answer to find out how much you can expect to earn as a freelancer or as an employee.
In an umbrella company, the salary varies according to the turnover generated, excluding expenses and benefits. According to the French National Institute for Statistics and Economic Studies (INSEE), the average salary for freelancers (excluding auto-entrepreneurs) was €3,580 in 2020. This figure evolves according to the experience and the field of activity and the country. So, what salary can you expect to earn in freelance administration in 2023? We tell you everything!
How to estimate your salary in freelance administration?
The first step is to evaluate your potential turnover. It is from this indicator that you will be able to determine the costs related to freelance administration and, consequently, the salary you can expect. To estimate your annual turnover, you can use a simple formula: multiply your ADR (average daily rate) by the number of days worked per month.
How to determine your average daily rate (ADR)?
To establish your ADR, it may be useful to ask your freelance colleagues about their daily work rate. If you do not have a sufficient network, there are many studies and evaluations available on the Internet. The Malt Barometer, for example, provides an estimate of daily rates for more than 95 job categories, classified into three levels of seniority. This estimate is based on the analysis of the profiles of nearly 200,000 freelancers who use this platform.
Setting your MRR also depends on several factors that you can evaluate using different resources. There are specific studies for certain trades that you can find by doing a Google search.
However, to adjust your MRR to the reality of the market, there are five criteria to consider:
● your seniority
● your references
● your specialties
● your location
● your experience as a freelancer
Payroll services: how to calculate your salary?
For example, if you have worked for a well-known group or on well-known projects, you can increase your average daily rate. Similarly, if you have acquired a rare specialization. If you work with companies close to your home, you should also consider adjusting your expectations to the rates charged in your region.
How to estimate your turnover in an umbrella company / freelance administration or EOR ?
Once you have determined your average monthly turnover, it is time to estimate your monthly turnover. To do this, you must first estimate the number of days you can bill each month. In general, there are 20 working days per month, however some days should be deducted from your calculation: vacations (2 days per month for 5 weeks of annual leave), days dedicated to prospecting (adjusted according to your difficulties in finding clients), training time as well as time spent on administrative tasks. Then we come back to the first formula: Average daily wage x number of days worked per month = monthly turnover. Generally speaking, an employee in freelance administration charges on average 17 days per month
Note that a freelance employee gives a percentage of his turnover (without tax) to the company of portage. This is called the management fees. It is thanks to these management fees that the portage company can offer mutualized services to all its employees. They primarily finance the operating expenses of the structure and in particular its personnel expenses. Some companies also offer regular support to their employees. These services are also covered by the management fees.
After having paid the management fees and the employer and employee social contributions, employee generally receives a net salary of between 45% and 60% of his or her turnover before tax.
Contrary to a classic employee, a ported employee has the possibility to optimize his income by passing on certain expenses as professional operating costs. As the reimbursement of professional expenses is not a salary, it is not subject to social security contributions and will therefore mechanically increase your net income under a Portage salarial. This is a real advantage compared to the status of Auto-entrepreneur (micro-enterprise) which does not allow the reimbursement of professional expenses.
Payroll services: how to calculate your salary?
The questions that all future consultants ask themselves
1) When will I be paid?
Generally paid once a month. The precise date of payment varies according to the company, but most of the time it is paid in the first half of the month. It is important to remember that the freelance administration company can only pay you once your invoices have been paid by your clients. Some companies, such as SKALIS, can use a factoring service which allows you to be paid even if your clients have not yet paid your invoices
2) How to get paid between two missions?
It is possible that you have free time between two missions because the freelance administration company is not obliged to provide you with missions. In this case, you can use the financial reserve that the company must set aside for you each month, which corresponds to 10% of your turnover (in accordance with the collective agreement on freelance administration). It is however recommended to anticipate this situation and to put money aside each month.
3) How to be paid in case of illness or vacations ?
In case of illness or vacations, you can benefit from the social security compensation for self-employed workers. However, this compensation is often insufficient to cover your expenses, so it is important to take out additional insurance.
4) How to find assignments? Register on specialized websites
There are a lot of websites offering freelance assignments.
Some of them propose generalist ads. Others focus on specific areas: marketing, graphic design, writing or programming for example.
Some are totally free like the Freelance-day.eu website and others work with a subscription. Take the time to find those that correspond to your activity. Once you have registered, think about setting up alerts so that you don’t miss any missions.
