Overhead and tax effects on rates

Translation agencies compared with freelance translators

When calculating translation prices, translation agencies, as well as freelance translators, have to consider their general overheads. Because overhead and tax effects on rates are a major influence on prices, please find below a detailed table comparing these costs.

Overheads, translation agencies: Overheads, freelance translators:
In-house staff such as sales, admin, accountancy, IT support, translators, proof-readers/revisers) and directors’ wages and associated costs Occasional professional services needed
Cost of hiring freelance translators
Office running costs such as rent of premises, business rates, telephone, Internet, insurance, accounting, advertising Telephone, Internet, insurance, advertising etc
Software and hardware for the entire office staff Software and hardware for one person
Retirement provision for staff and directors Retirement provision
Taxes, translation agencies: Taxes, freelance translators:
VAT always chargeable VAT not always chargeable
Corporation tax Income tax
National insurance for staff and directors National insurance at self-employed level
Other local taxes may apply Other local taxes may apply

Analysing the above table, it is easy to understand why translation agencies’ rates don’t just tend to be higher than those of agency-independent translators but they have to be higher to cover the considerable overhead and tax effect on translation companies’ prices.

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