1099 Independent Contractor

[JB4310]

I'll give my take on this, there is no downside for the employer. There is much downside for the customer though.
This is more referring to being an independent in the construction industry, but must have some basic similarities to your line of work.

The employer wants you to be independent because it reduces their costs obviously, the customer then assumes the liability of being the employer in terms of workman's comp and other insurance coverages.

It drives the insurance companies crazy, and they have tried to rein it in, audits have to show who is paying the comp insurance for the person doing the work. Someone has to pay it or the customer is exposed to great risk.

Also their are rules that if you do more than 50% of your work for the same company you are not independent.

I know of small construction companies that have (gotten away) with doing it for 30 years and others that got shut down after 1 year.

I'm curious how this is different in your line of work.

JB

 

[JB4310]

Roy, Liability Ins is cheap. Do yourself (family and estate) a favor.

One doesn't have to have a LLc or Corp to be a business.

That's right.
Insurance agents will tell you to carry adequate coverage. Lawyers will tell you to protect yourself with a corporate (veil).
But it's very easy to (pierce) the corporate veil of a one man corporation. That's a little lawyer talk

I vote for carrying more insurance.

But I don't know how they could go after you if some part you inspected for the company failed. should be the company that has the liability?

If you don't need the employee benies (or can't get them from anyone else), then I think it should be a good deal for you.

JB

 

[RoyJackson]

If you don't need the employee benies (or can't get them from anyone else), then I think it should be a good deal for you.

JB

As far as health insurance, I'll have to buy my own. From what I've read so far, this is a 100% deductable expense.
I'm also looking into vehicle depreciation, office supplies, etc.
I've no doubt IF I do this, I'll be talking to an accountant.

 

[JB4310]

As far as health insurance, I'll have to buy my own. From what I've read so far, this is a 100% deductable expense.
I'm also looking into vehicle depreciation, office supplies, etc.
I've no doubt IF I do this, I'll be talking to an accountant.

I'll tell you, all the deductions have been one of the best benefits of my small company. I have deducted everything from every vehicle I've owned to dog food (guard dog )

If you do the corporate thing, you can show much of your income as unearned capital gains, pay no SS tax and just 15% flat rate. I believe you could do this, I did that with an llc, paying myself rent for a property I owned :confused2:

You will be like a little Romney :laughing: Those points were probably already mentioned, but I did not read all thru the thread.

JB

 

[RoyJackson]

You will be like a little Romney :laughing: .

JB

A little Romney....Hmmmmm...not sure that's something to be proud of...

 

[JB4310]

A little Romney....Hmmmmm...not sure that's something to be proud of...

No it really isn't but since this is not the front porch I won't get into that any further.

Though he does have some awesome accountants apparently

JB

 

[RoyJackson]

No it really isn't but since this is not the front porch I won't get into that any further.

JB

Yep, back to the topic, at hand.

 

[JB4310]

Yep, back to the topic, at hand.

I spouted out a bunch of stuff, but I'm not really sure you can shelter your income as unearned in that situation. If you could then it would be worth it to incorporate.

Like I said I was able to have my contracting company pay rent to my llc for property I already owned through the llc. Any money left over in the LLC at the end of the year after expenses came back to me as unearned income.
No SS tax and only flat 15% cap gain tax. This was all on a fairly small scale but worked pretty good for me for a few years.

JB

 

[ultrarunner]

Brother's in-law was laid off from the advertising/graphics company where he worked...

In the mid 2000's... we never saw him... 60+ hours each week were the norm... that all changed with the economy.

They asked him and one other guy back last year... the difference is they get 1099's now... and he was shocked when he found he needs to come up with a bundle when doing his taxes...

Has a new baby... so needs to work... just didn't realize the difference till it home with the taxes, social security... etc...

At its' peak... it was the Husband and Wife and their son and daughter with 14 employees... now it is the family with two 1099 workers...

 

[edlegault]

Be really careful with the "contractor" status. IIRC the IRS has a checklist to use to determine if you are really a contractor and not an employee. From what I have read, most "contractors" are really employees and get burned by the IRS. From what this non-lawyer and non-cpa person reads, it looks like the OP would be working for the company that is contracting with the employer. One of the big checklist items is who controls your time. Can you go home when you want? Who's tools, etc., do you use? Who has final say on the finished product? Do you bill for each job separately? It can be a real mess. Hire a tax professional to get the correct answer.