Re: Contractor 1099

Subject: Re: Contractor 1099
From: "Steven J. Owens" <puff -at- NETCOM -dot- COM>
Date: Thu, 6 May 1999 15:50:34 -0700

DBarr41088 -at- AOL -dot- COM writes:

> Today is my last day as an Agency Contractor. My next project does not start
> until a month from now. I want to go solo... What does Contractor 1099 mean
> (sole business owner/company/organization)? What kind of paperwork do I have
> to file/process to get there? Do I need a business license? What are the
> advantages and disadvantages?

The "1099" comes from the name of the tax form you get from a customer
instead of a W2 you'd get from an employer. In essence it means you're
opening your own business.

You have to file 1099 taxes. You have to file quarterly
estimates of what your taxes will be. You may need to register a DBA
(Doing Business As) with your state gov't (in Pennsylvania it's the
"Bureau of Fictitious Names", I kid you not). You may need to get
some sort local license or pay some fee (Pittsburgh has a yearly $10
fee, since most of my work is via job shops, I've only ever seen that
show up as a deduction on a paycheck).

Advantages and disadvantages are a *much* bigger topic. Tax
advantages of being 1099 depends on how much you spend supporting your
job, i.e. on whether you'll save enough money filing your taxes to
make it worth the grief of tracking everything and filing very
detailed tax forms. You'll also have to pay an extra 7.5%, the other
half of FICA/social security that your employer normally pays.

Pick up Janet Ruhl's _The Computer Consultant's Guide_. It's meant
more for people doing programming, systems integration, troubleshooting,
etc, but it's largely focused on the business nuts 'n bolts, not on
technology issues, and it applies well for most writers.

Steven J. Owens
puff -at- netcom -dot- com


In general I prefer working as a "job shopper" to working as
either a regular employee or as a 1099 contractor. Being a "job
shopper" (or in the programming field just "contractor") means that
I'm a W2 employee of a middleman company. Since most big employers
have policies prohibiting them from directly employing an
unknown/unapproved company (to protect them from the implications of
IRS form 1720), they have to hire through "job shop" - a middleman
company. On paper you're a regular employee of the jobshop.
Sometimes it even ends up that way - you're just like a regular
employee at the client company, work there for years, etc, only your
paycheck and benefits are handled by the job shop.

But I find that in practice - and the way I like it - you deal
with a bunch of job shops and retain a fair amount of autonomy.

From ??? -at- ??? Sun Jan 00 00:00:00 0000=

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