A US employee costs far more than their salary, typically 1.25× to 1.4× base pay once you add payroll taxes, benefits, and equipment. A 1099 contractor has a higher hourly rate but no benefits overhead. An offshore virtual assistant usually has the lowest total cost, even after platform or agency fees. The cheapest sticker rate is rarely the cheapest true cost, and vice versa.
When you compare hiring options on salary or hourly rate alone, you get the wrong answer. The real comparison is the loaded cost, everything you actually pay to get the work done. This breakdown shows what each option really costs and when each one wins.
To plug in your own numbers and see all three side by side, use the Employee vs Contractor vs VA Cost Calculator.
The US employee: salary is only the start
A $50,000 salary does not cost you $50,000. On top of base pay, employers typically carry:
- FICA / payroll taxes, the employer’s share of Social Security and Medicare (~7.65%)
- Health insurance, the employer contribution, often $400–$700/month
- Retirement match, commonly 3–6% of salary
- Equipment, software, and tools, laptop, licenses, workspace
- Paid time off, training, and overhead
Add it up and a $50,000 employee commonly lands around $62,000–$70,000/year in loaded cost. The upside: an employee is fully integrated, available full time, and you control their work directly, which is exactly why they’re legally an employee and not a contractor.
The 1099 contractor: higher rate, lower overhead
A US contractor charges more per hour, often $35–$80 for skilled work, because they cover their own taxes, benefits, and downtime. But you pay no payroll taxes, no benefits, and no equipment. You pay for hours or deliverables and nothing else.
For part-time or project work, this usually beats an employee on total cost. The trade-offs: less control over how and when the work happens (by law, that’s the point), and the risk of misclassification if you start treating the contractor like staff. Before you rely on a contractor long-term, check your exposure with the Misclassification Risk Checker.
The offshore VA: lowest total cost
An offshore virtual assistant, commonly Philippines- or India-based, typically runs $5–$15/hr, plus a platform or agency fee of 10–35% if you hire through a marketplace. Even loaded, the total is usually well below a US contractor or employee for comparable hours.
VAs are strongest for delegatable, recurring work: inbox and calendar management, data entry, research, scheduling, social media, and customer support. The hidden cost is onboarding, you’ll invest several hours building SOPs and training before the time savings kick in. To estimate ongoing cost, see the Virtual Assistant Cost Calculator, and for the payback math, the Outsourcing ROI Calculator.
Side-by-side example
Here’s roughly how 20 hours/week of work compares across the three options:
| US employee (pro-rated) | US contractor | Offshore VA | |
|---|---|---|---|
| Headline rate | $50k salary | $35/hr | $8/hr |
| Payroll taxes | Yes (~7.65%) | None | None |
| Benefits / equipment | Yes | None | None |
| Platform / agency fee | N/A | 0% direct | 10–35% |
| Effective hourly (loaded) | ~$60/hr | ~$35/hr | ~$9/hr |
The exact numbers depend on your inputs, the Hire Comparison Calculator computes the loaded monthly, annual, and effective-hourly cost for each. If you’re deciding between a salaried W-2 role and 1099 contracting for yourself, the 1099 vs W-2 Calculator compares take-home pay and the rate you’d need to match a salary.
Which one should you choose?
- Choose an employee when the role is core to your business, needs to be available full time, and requires you to direct how the work is done day to day.
- Choose a contractor for specialized, project-based, or part-time work where you can define a clear scope and let them own the method.
- Choose a VA for recurring, delegatable tasks where the goal is to reclaim your own time at the lowest cost.
Cost is only one axis. Control, legal classification, and the kind of work all matter. But once you’ve narrowed the options, the loaded-cost comparison usually makes the financial choice obvious.
A word on legal classification
The cheaper options come with a catch: if you treat a contractor or VA like an employee, setting their hours, controlling their methods, making them work exclusively for you, tax authorities can reclassify them, and the back taxes and penalties erase any savings. Read our independent contractor vs employee legal guide and run the Misclassification Risk Checker before committing.
Related tools and reading
- Employee vs Contractor vs VA Cost Calculator, loaded cost, side by side
- Outsourcing ROI Calculator, is a VA worth it for you?
- Virtual Assistant Cost Calculator
- Independent contractor vs employee legal guide
- Best VA companies in the Philippines