Job Status Change - Suggestions

Discussion in 'Off Topic' started by flyingdawg, Mar 25, 2012.  |  Print Topic

  1. flyingdawg
    Original Member

    flyingdawg Gold Member

    Messages:
    1,072
    Likes Received:
    1,702
    Status Points:
    1,120
    Hello Everyone. Just looking for some general, helpful input that I am sure this group can provide. I am facing a change in jobs. My current company is closing. I am weighing offers from two companies within the same industry in which I currently work. One is a standard W2 arrangement where I am an employee of the company. The other offer is from a company who would employe me as a contractor (1099). I am inclined to go with the company offering the contractor position because of my gut feelings about the people and company I would be working with.

    As this would be my first foray into the contractor arena, I would welcome any ideas, input, viewpoints on the advantages of this arrangement or disadvantages. Just to add a bit of detail. It is intended to be a long-term position as a sales representative.
     
    uggboy likes this.
  2. wrxmom

    wrxmom Gold Member

    Messages:
    1,161
    Likes Received:
    3,558
    Status Points:
    1,945
    When you're an independent contractor, you're responsible for paying your own taxes. With that in mind, if you aren't a good record keeper, and aren't disciplined to put aside the tax money, then maybe the job as an employee might be better?
     
    uggboy and flyingdawg like this.
  3. flyingdawg
    Original Member

    flyingdawg Gold Member

    Messages:
    1,072
    Likes Received:
    1,702
    Status Points:
    1,120
    I don't think the record keeping issue and putting aside taxes should be a problem. I will be doing a good amount of traveling should that will requrie addtional, detailed recording keeping. I am curious about the car situation. Shold I lease, which I understand is fully tax deductable? Or is buying a car (a couple of years old) a better or worse option from a tax standpoint?
     
    uggboy likes this.
  4. autolycus

    autolycus Gold Member

    Messages:
    2,136
    Likes Received:
    7,321
    Status Points:
    5,000
    A few of things that should be major considerations:

    1) Health insurance availability and cost
    2) Availability of a pension plan--you can likely set up a self-employed pension, but it won't be as simple as participating in a 401k that someone else has already established
    3) As an independent contractor, you will likely be responsible for paying both the employee and employer portion of FICA. That's an additional 7-8% in taxes that are "hidden" when you work as a W2 employee.

    I'm happy to provide more detail on those if you have specific questions, but there's too much involved to just throw out all the possible scenarios.

    Would you be reimbursed for mileage by the company? It definitely changes the tax situation for an owned car, and I imagine it does for a leased car as well. I have never leased a car and never would because the finances aren't very favorable in most situations, especially when compared to paying cash. If you look at leases, be VERY cautious about mileage allowances. Most leases have low limits on miles you can put on the car and extremely high rates for overages.
     
    uggboy, flyingdawg and wrxmom like this.
  5. MSPeconomist
    Original Member

    MSPeconomist Gold Member

    Messages:
    58,563
    Likes Received:
    98,528
    Status Points:
    20,020
    You would probably be required to make quarterly tax payments since most or all of your taxes would not be covered by withholding.
     
    flyingdawg and autolycus like this.

Share This Page