1099 Independent Contractor

[randy41]

if you get a 1099 then you will file a schedule c with your tax return along with sched SE. there are many advantages to getting a 1099. you can write-off business expenses directly against your 1099 income instead of taking an itemized deduction for employee business expenses.
i think some simple math will tell you if you can make money at it. the tax consequence shouldn't be the deciding factor.

 

[Hooked_on_HP]

I don not know what you do for a living so I will throw these ideas out there. Things might be different in Pa than IL. You won't be covered by workmans comp. You will have to provide you own health ins. You will have to provide liability insurance (incase you screw up) You will have to pay your SS and unemployment benifiets.
Bill

 

[Soundguy]

I've been offered a job as an independent contractor. Although I've done a fair amount of contract work over the years, I was always an employee (for payroll and tax purposes) of the agency.
This will be my first time as an independent. I'm doing some research (online) but would also like some experiences of folks who have done this kind of work.
Although the rate (hourly) is quite good, if the added expenses/taxes of being "independent" cut into the gross too much, it won't be a worthwhile endeavor for me.

So, any of you guys ever worked as a 1099 contractor?
If so, what are the pitfalls? The advantages?
A little more info: my work schedule would be set by the agency which, in turn, is contracted to the client.

i did it for the past 12ys and just finally got hired on as an employee.

I got a 1099 at the end of the year instead of a w2... I paid quarterly taxes.... I already filed 1040a long form anyway... I just gave all the stuff to the cpa. bill was about the same when I was an employee as a sub...

money is money...

soundguy

 

[RoyJackson]

I don not know what you do for a living so I will throw these ideas out there. Things might be different in Pa than IL. You won't be covered by workmans comp. You will have to provide you own health ins. You will have to provide liability insurance (incase you screw up) You will have to pay your SS and unemployment benifiets.
Bill

I already knew most of what you posted.
I work as a Quality Engineer...mostly in the automotive, aerospce and rail industries. (Light) Rail is the biggie, right now. It's a very busy industry and should be going strong for the next several years.
Liability insurance won't be needed (I think...might be something to consider if I go S Corporration or LLC).

What I'm mostly concerned about is the deductable expenses. There's an opportunity to make very good money doing this, IF I can get past the first few (ramp up) months.

 

[RoyJackson]

i did it for the past 12ys and just finally got hired on as an employee.

I got a 1099 at the end of the year instead of a w2... I paid quarterly taxes.... I already filed 1040a long form anyway... I just gave all the stuff to the cpa. bill was about the same when I was an employee as a sub...

money is money...

soundguy

The CPA costs are deductable too, correct?

 

[Duffster]

Liability insurance won't be needed (I think...might be something to consider if I go S Corporration or LLC).

I guess I have to question this.

Why not?

 

[JimRB]

Business use of a personal vehicle. Does your autombile insurance frown on this? My homeowners insurance tried to cancel it because they saw a farm sign at the entrance to our property. All the creatures on our farm are owned by us or we were leasing them. We have no boarders and we do not give lessons. We sorted that out and continued our coverage.

Back when I did tile work I had one vehicle that was my work vehicle and got very little personal use. I think I deducted as much as I could on that vehicle. We have not deducted a corner of the house my wife uses for her artwork and graphic design. Some more aggressive folks would claim business use of a room in the house.

It sounds like you have a good opportunity ahead of you.

 

[RoyJackson]

I guess I have to question this.

Why not?

In the position I'm looking into (the client has already told the recruiter they want me), I would be contracted to a company that coordinates my schedule for their client. Compensation would be as a 1099 Independent Contractor.
Unlike a doctor, lawyer, Accountant; I wouldn't have my own business unless the S-Corporatio or LLC made sense. This is what I'm looking into now.
As far as liability...in theory, I suppose the client (of the agency I'm contracted to) could sue me if I made a costly mistake. Something to consider, I suppose...but I don't see liability as being a big threat in the kind of work I do.

Although I've done a lot of contract work over the years, this would be the first time I'd be going in as 1099 (although it's not unusual for this type of engineering work). Previously, I'd work as a "short term" (W-2) employee of the contracting agency.
Many large companies use contractors. I know Harley Davidson's engineering dept. was about 40% contractors. This is advantegeous to the contractor as it frequently pays a higher rate and to the company as they have less "employees" on the books.
This kind of work also depends on the quality of the contracting agency (not the client). Some have been around for years and are good to work with. Due to the crappy economy, there's a lot of upstarts (both in contracting and recruiting) that really suck. That's why it's important to actually interview with the client company to make sure it's a good fit (not all are...I could name one that was very recent).

Bottom line is, can I do this job and make money at it.

 

[Duffster]

In the position I'm looking into (the client has already told the recruiter they want me), I would be contracted to a company that coordinates my schedule for their client. Compensation would be as a 1099 Independent Contractor.
Unlike a doctor, lawyer, Accountant; I wouldn't have my own business unless the S-Corporatio or LLC made sense. This is what I'm looking into now.
As far as liability...in theory, I suppose the client (of the agency I'm contracted to) could sue me if I made a costly mistake. Something to consider, I suppose...but I don't see liability as being a big threat in the kind of work I do.

Although I've done a lot of contract work over the years, this would be the first time I'd be going in as 1099 (although it's not unusual for this type of engineering work). Previously, I'd work as a "short term" (W-2) employee of the contracting agency.
Many large companies use contractors. I know Harley Davidson's engineering dept. was about 40% contractors. This is advantegeous to the contractor as it frequently pays a higher rate and to the company as they have less "employees" on the books.
This kind of work also depends on the quality of the contracting agency (not the client). Some have been around for years and are good to work with. Due to the crappy economy, there's a lot of upstarts (both in contracting and recruiting) that really suck. That's why it's important to actually interview with the client company to make sure it's a good fit (not all are...I could name one that was very recent).

Bottom line is, can I do this job and make money at it.

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.

 

[RoyJackson]

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.

I'll give that some consideration.
BTW, I did contact the contracting agency (last Friday) about working for them as an S Corporation. No response yet.
The agency I'd be working for is long established. I've worked with some of their people on and off over the years.