How to calculate real wages?

What's the best way to calculate wages from hours?

• I am a sole proprietor and build mobile applications. Last year I used a tax consultant to file taxes for me and he calculated wages for R&D credit (IRS form 6765). This year I am trying to understand how to calculates the wages based on number of hrs spent towards R&D. Any ideas?

• Answer:

  A.  If you view yourself as an enterprise and not simply a 1099 contractor, then you need a financial forecast of your anticipated revenue and parallel expenses plus a reasonable profit.   B.  Given the above you can calculate a rate that carries a competitive labor wage and a burden to cover the cost of your company expenses and a profit to allow company expansion.  Once you have A and B above you can see how your rate compares in the market place and quote based on managing your direct wage and your expenses over a 1-2 year period or so and then re-plan and recalculate your rate based on results. The theory behind this approach is that it does little good to quote a rate that does not cover your operating expenses and permit expansion of your firm.  That is the reason for your being in business for yourself in the first place.