Calculate overtime pay, total weekly earnings, and effective hourly rate including time-and-a-half.
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A Texas-based freelance graphic designer earns $140,000 net profit/year from client work. She's evaluating whether to stay as a sole proprietor, form an LLC, or elect S-Corp status to reduce self-employment taxes.
Takeaway: S-Corp saves $8,300/year but adds ~$1,500-$3,000 in accounting fees (payroll, extra returns). Break-even is around $80-90K net profit. Below that, the overhead eats the savings. Texas has no state income tax, so the benefit is purely federal SE savings.
LLC annual fees range from $0 (Ohio) to $800 minimum (California, even for zero-revenue LLCs). Delaware C-Corp is standard for VC-backed companies but adds registered agent costs (~$300/yr) for out-of-state entities. The "best" structure is state-specific.
S-Corps cannot have more than 100 shareholders, cannot have non-US shareholders, and cannot have corporate shareholders. Violating these rules (e.g., adding a foreign investor) terminates S-Corp status retroactively, potentially creating a large unexpected tax event.
The IRS requires S-Corp owner-employees to pay themselves a "reasonable salary" before taking distributions. There is no fixed formula — the IRS looks at industry benchmarks, duties, and hours worked. Setting the salary too low is a common audit trigger for S-Corps.
Business break-even models track revenue vs. direct costs. They rarely factor in the owner's time as a cost. If you're working 60 hours/week at imputed $50/hour, your "profitable" business may be paying you $12/hour after the opportunity cost calculation.
Break-Even CalculatorA service business valued on EBITDA multiples (2-4×) gets a very different number than one valued on SDE (seller's discretionary earnings) or discounted cash flow. Buyers and sellers typically use different methods to argue their preferred price. This calculator uses a single method.
Business Valuation CalculatorBased on your inputs
8.0 overtime hours
| Regular Hours | 40 hrs @ $20/hr |
|---|---|
| Regular Pay | $800.00 |
| Overtime Hours | 8.0 hrs |
| OT Rate (1.5×) | $30.00/hr |
| Overtime Pay | $240.00 |
| Total Weekly Pay | $1040.00 |
| Effective Hourly Rate | $21.67/hr |
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Under federal FLSA, overtime applies after 40 hours per week for non-exempt employees. Some states (CA, NV) also require daily overtime after 8 hours.
The standard overtime rate is 1.5× the regular hourly rate (time and a half). Some employers offer double-time (2×) for holidays or excessive hours.
Salaried employees earning under $684/week ($35,568/year) are typically eligible for overtime. Those above this threshold may be exempt depending on job duties.
Divide weekly salary by 40 to get hourly rate, then multiply excess hours by 1.5× that rate.
Double time pays 2x the regular hourly rate. California requires double time after 12 hours in a day or for hours worked on the 7th consecutive workday. Federal law does not require double time.
Yes. California requires 1.5x pay after 8 hours in a workday and 2x after 12 hours. Most other states follow only the federal 40-hour weekly threshold for overtime.
Overtime is not taxed at a special rate. However, the extra income may push your total pay into a higher tax bracket. Employers may withhold at the supplemental wage rate of 22%.
Executive, administrative, professional, computer, and outside sales employees earning above $684/week may be exempt. Exemption depends on salary level and job duties, not job title alone.
Private employers generally cannot offer comp time instead of overtime pay under FLSA. Government employers can offer 1.5 hours of comp time per overtime hour worked as an alternative to cash payment.
Divide the weekly salary by 40 to find the regular hourly rate, then multiply that rate by 1.5 for each overtime hour. Non-exempt salaried employees earning below the FLSA threshold must receive overtime pay for hours exceeding 40 per week.
OT Hours = Total Hours − Regular Hours (usually 40)
OT Pay = OT Hours × (Hourly Rate × OT Multiplier)
Total Pay = Regular Pay + OT Pay
Every formula on this page traces to a federal agency, central bank, or peer-reviewed institution. We cite the rule-makers, not secondhand blogs.
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Calculations are for educational purposes only. Consult a qualified financial advisor for personalized advice.