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Employee vs Independent Contractor
Posted on 5/4/14 at 2:33 pm
Posted on 5/4/14 at 2:33 pm
Say a company offers to pay you $1488 per shift as an employee or $1572 per shift as an independent contractor. If you are an employee, they withhold taxes. You would have to apply for LLC status if you want to be an independent contractor.
What factors determine which route you should take?
ETA This would be a second job, the first job is the majority of your income and has benefits.
What factors determine which route you should take?
ETA This would be a second job, the first job is the majority of your income and has benefits.
This post was edited on 5/4/14 at 2:52 pm
2
Posted on 5/4/14 at 2:44 pm to Stingray
The additional pay wouldn't even cover your SE tax
plus as contract you have no benefits....401k, insurance, etc
plus as contract you have no benefits....401k, insurance, etc
Posted on 5/4/14 at 2:47 pm to yellowfin
neither have benefits
But I guess you have answered my question with your first line.
If that is the case, why would anyone ever pick the independent contractor route?
But I guess you have answered my question with your first line.
If that is the case, why would anyone ever pick the independent contractor route?
Posted on 5/4/14 at 4:39 pm to Stingray
the law is very clear about treatment of an Independent Contractor. If the employer tells you when to report and exactly what to do they cannot treat you as a contractor. For any company to make this offer would have me questions whether this a company I would work for.
Sounds sketchy
Sounds sketchy
Posted on 5/5/14 at 9:04 am to 756
quote:
the law is very clear about treatment of an Independent Contractor. If the employer tells you when to report and exactly what to do they cannot treat you as a contractor. For any company to make this offer would have me questions whether this a company I would work for.
This. There are a bunch of factors that go into whether or not you are an employee or independent contractor. How you are paid is not one of those factors. They essentially go into how much control the employer has over your day to day work.
The fact that they are offering you a choice tells me that you should correctly be classified as an employee.
I'd have concerns if I were you.
That having been said... if you were a 1099 contractor, yes you could set up an LLC, and you could also deduct all of your work expenses, which would lower the amount of your self-employment income (yet, also cost you actual money). Does the type of job require a lot of spending, travel, expenses, etc? If you were an employee would you be reimbursed for those things?
Posted on 5/6/14 at 12:09 am to LSUFanHouston
Pay is a factor, according to IRS 20-factor worksheet:
12. Payment by hour, week, or month. This points to employer-employee relationships, provided that this method of payment is not just a convenient way of paying a lump sum agreed on as the cost of a job. Independent contractors are usually paid by the job or on straight commission.
13. Payment of business and/or traveling expense. Employers paying workers’ expenses of this nature shows that employer-employee relationships usually exist.
12. Payment by hour, week, or month. This points to employer-employee relationships, provided that this method of payment is not just a convenient way of paying a lump sum agreed on as the cost of a job. Independent contractors are usually paid by the job or on straight commission.
13. Payment of business and/or traveling expense. Employers paying workers’ expenses of this nature shows that employer-employee relationships usually exist.
Posted on 5/7/14 at 8:26 am to matthew25
Matthew25... you are correct... what I was attempting to say is the pay differential is not a factor.
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