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Me GOP
Go Geoducks!
PeaNut 29902 - 2/14/2002
Posts: 16292 Layouts: 16
 |  Posted: 6/29/2006 12:28:34 AM
Well, it depends very much on your goals and the job you are doing...
I am a 1099 and charge my own rate to make up the fact that I pay 100% of my ss and medicare taxes myself. I have multiple clients which consider me a contractor so 1099 is the route I have to take.
However, with the 1099, I'm not eligible for unemployment, workman's comp or any corporate benefits (although there are some self-employed benefits you can take advantage of.)
So what it really comes down to questions. Is this your primary employer, are you going to take on more clients, is there any worker health risk to you etc. etc.
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Me GOP
Go Geoducks!
PeaNut 29902 - 2/14/2002
Posts: 16292 Layouts: 16
| Posted: 6/29/2006 12:34:09 AM
Oh, and yeah, I write stuff off, but it is tougher than you think to write off a home office. I do better with equipment, but the actual home space was a no go considering the set up we have at home.
So you have to evaluate the percentage and dollars of SS, medicare tax you would be paying vs. your tax rate and how much you realistically could write off. (and consider if you even get over the standard tax deduction to be able to write off if you are not going to incorporate).
Does that make sense? I'm not a tax person...just living it.  |
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Me GOP
Go Geoducks!
PeaNut 29902 - 2/14/2002
Posts: 16292 Layouts: 16
| Posted: 6/29/2006 12:54:58 AM
If you are not going to incorporate and will just be doing this under your own ss number and filing your "income from services" (provided you aren't selling a product subject ot sales/use tax) along with your personal income tax, then you must exceed the standard deduction to even be able to write stuff off.
But again. A tax pea would be much better at this than I. I did hire an accountant. |
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haberichter
PeaNut
PeaNut 52738 - 10/18/2002
Posts: 84 Layouts: 0 | Posted: 6/29/2006 10:15:23 AM
Take the W-2. If you are self-employed (paid with a 1099) you are responsible for paying both side of your FICA. That means you have to pay 15.3% of your income (7.65% for the employer and employee side). When you are paid by W-2, you pay the employee share, and the employer pays the match (saving you 7.65%).
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mkey
PeaAddict
PeaNut 148967 - 5/26/2004
Posts: 1380 Layouts: 0
Loc: Oregon
 | Posted: 6/29/2006 10:20:51 AM
Personally I would go the W2 route. What do I Know... I am a CPA but been home with the kiddos for the past 3 years except for part time during tax season. |
Michelle
Stay at home mommy to Jonathan, 7 years old and Jocelyn 5 years old and Michael 3 years old,1 Belgium Malinois SAR puppy, 1 choc lab dog and 1 boston terrier dog and an indoor cat. AND I started two businesses from home... my own CPA practice and mortgage company. Just call me crazy! I love LIFE! | |
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pheestand
AncestralPea
PeaNut 6487 - 9/7/2000
Posts: 4286 Layouts: 16
Loc: Livonia, MI USA
 | Posted: 6/29/2006 10:34:13 AM
I just started an S Corp for my bookkeeping business. I also hired a payroll company to process a payroll check for me, and I'm now eligible to contribute to a retirement plan as well.
Check in to a reputable tax accountant. Got lots of great options from mine and it was worth his fee (which is now a business expense!) to have everything set up and in place.
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krissti
Yoda's mom, I am.
PeaNut 87060 - 5/20/2003
Posts: 7976 Layouts: 24
Loc: Welcome to Atlanta where the players play
 | Posted: 6/29/2006 10:37:18 AM
I've done both, but I tended to do a little better with the W2.
Also, I'm horrible with keeping up with receipts, etc. and it was hard for me to stay disciplined in that regard. |
-Kristi
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allisonmud
AncestralPea
PeaNut 204958 - 5/11/2005
Posts: 4095 Layouts: 134
Loc: Chicago burbs
 | Posted: 6/29/2006 11:10:17 AM
My dh is a 1099, and I do our taxes. I wish he was a W2 often.
He gets no benefits; no unemployment if his company shuts their doors tomorrow; no vacation or sick time; we can write off alot, but that only makes our income look lower, therefore making it difficult to qualify for, say, a bigger mortgage, and it makes his SS contributions smaller than we'd like.
However, DH can make his own schedule; if he were a W2 emp., he would have to answer to a boss a great deal more than he does now. As a 1099, he truly is his own boss. |
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brkiritsy
BucketHead
PeaNut 46545 - 8/23/2002
Posts: 810 Layouts: 0
Loc: AZ High Country | Posted: 6/29/2006 11:34:23 AM
If the salary was the same, I would take the W-2.
If you are an employee, your employer matches the FICA taxes that are withheld from your paycheck, but if you are a 1099 employee, you will have to pay both sides in the form of self-employment tax.
However, you may be able to charge more as a contractor than you would receive as an employee because the employer wouldn't have added expenses of FICA taxes, unemployment, etc.
But, if you do work as a contractor, incorporate your business, like LLC or S-Corp. Then you can be paid dividends and salary, with self-employment taxes paid only on the salary portion.
Rebecca |
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SillyRabbit
PeaAddict
PeaNut 104457 - 9/1/2003
Posts: 1815 Layouts: 12
| Posted: 6/29/2006 11:35:21 AM
I would choose the W-2 route. |
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*Sara*
insert clever Pea Title here
PeaNut 36466 - 4/21/2002
Posts: 5886 Layouts: 80
Loc: upstate NY | Posted: 6/29/2006 11:40:53 AM
I worked as an independent contractor for 18 months and will never do it again. I was able to write off part of my rent and utilities since I had a home office, but we still ended up owing a ton in taxes. Also, I was working for a state agency and the budget was slashed. They had to get rid of 80% of the staff (I was cut in January) and since I was an IC, I didn't qualify for any unemployment benefits.
I can't think of a scenario when I'd choose to be an independent contractor over a reguar employee, but that's just me. |
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taysmommy
PeaAddict
PeaNut 61896 - 1/11/2003
Posts: 1441 Layouts: 53
Count: 1 | Posted: 6/29/2006 11:51:10 AM
My SO was an independent contractor and used the 1099 when we first got together. And from personal experience, save yourself the headache and go with the W2. Our tax preparer advised us to go with a W2 from now on, and after seeing the difference in our tax refund (a couple thousand), thats what we'll be doing. No more 1099's for us.
Oh, and I've been checking out your photography, and you are doing a great job! If you lived closer I'd love to get you to do a family photos for us. |
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GulfcoastJohn
Baby Pea Step
PeaNut 330407 - 8/1/2007
Posts: 1 Layouts: 0 | Posted: 8/1/2007 10:27:03 AM
Hi:
Have a question regarding W2 vs 1099. I have been asked to work as Independent Contractor for Canadian company. Makes it a lot easier and cheaper for them.
They are paying me a flat salary of $75000, all travel expense and car allowance.
Any comments on value of benefits I am giving up dollar/% should I ask for, bigger salary.
Appreciate comments
John | |
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m2b
Peased to Meet You!
PeaNut 226741 - 10/11/2005
Posts: 6453 Layouts: 0
| Posted: 8/1/2007 10:47:43 AM
Gulf coast John,
Are you being paid in Canadian or US $$.
Right now they are pretty close, but I can tell you it can change. Less than a year ago 75000 canadian would only have been about 50000 US, |
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