Questions

I am now focused on sales and marketing for the company and I am using my own resources (from my business which is an LLC) such as car, gas, computer, printer, software and home office. I am wondering if it would be a benefit to become a 1099 employee versus a W2? What are the Pros and Cons of 1099? What are the pros and cons of W2

I'm assuming you're talking about yourself, working for another company? The first thing to consider is that a "1099" is NOT an employee, rather an "independent contractor". The IRS takes it seriously when a company claims 1099 contractors, when in fact, these contractors are treated as employees (the IRS wants payroll tax and will fine companies that miscategorize). To be a 1099 contractor, rather than an employee (W-2), you must have complete control over your schedule - when you work, how much ect. There are other criteria, but this is the main one - you must clearly not be treated the same as an employee. The other thing to consider is that if you are a 1099 contractor, you are responsible for paying and submitting your own income tax and self employment tax to the state and the IRS.

It is more advantageous for a company to pay you as a 1099 contractor as they save paying employer portion of payroll taxes. Also you will not count as an employee for the Affordable Care Act (which impacts companies with over 50 employees).

Hope this helps.
Kathryn


Answered 5 years ago

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