[tax man] independent subcontractor

N

nada

Veteran X
i have an employer that sucks at money. they owed me a lot of weeks of backpay so after asking nicely twice, and having a proposed pay date come and go, i said last chance before i call the labor dept, and miraculously, my money has appeared.

i have my money bc i played hardball but the whole payroll system is still fucked for probably a dozen other employees - some of whom aren't even still on staff but are still owed money and thus getting checks cut every week. i'm thinking about staying on bc it's a pretty easy gig (social media related) and not my only client. but if i do this, they said the only way they can ensure me getting paid is to get off the payroll system and becoming an independent subcontractor.

i'm really bad at tax stuff, and only a little better a google, so can anyone advise on the strengths and weaknesses of this switch? i know i'll have to pay my own taxes at the end of the year - is that a fairly simple bit of math? Are there liabilities/anything else to look out for? Do tax rates change? What about soc sec/medicare that stuff?

also the accountant literally said "independent subcontractor" but most google hits conform to "independent contractor" -- is her thing even a thing?
 
Get an accountant. Pay them. Job done.

Pros
You get paid a shit ton more money
You get to pay your own tax, which means you pay less than you would as an employee of a company
You get to set up a limited company which means that you can claim expenses, expenses are good.

Cons
Don't get called an employee, or the tax man will kill you for it
Less job security + you have to pay into your own pension
Tax forms are lame.
 
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Put 30% of the money you make from it aside. Just use anything like turbotax\taxslayer at the end of the year to calculate what you owe and account for deductions.

Once you're off payroll, all sorts of shit will probably become deductible(mileage\portion of cell phone\portion of home internet, home office).

But to answer your general question you can be a complete moron and not have a problem with this... the only real mistake you can make is not setting the money aside to pay the taxes you owe at the end of the year.
 
Do that every month, don't wait until the end of the year to find you have a massive tax bill that you cannot afford. Anything owned by the company will be taken and you will be blacklisted from ever owning a limited company again.
 
Phantred said:
But to answer your general question you can be a complete moron and not have a problem with this... the only real mistake you can make is not setting the money aside to pay the taxes you owe at the end of the year.
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this is what i hoped
 
Gweedo said:
Do that every month, don't wait until the end of the year to find you have a massive tax bill that you cannot afford. Anything owned by the company will be taken and you will be blacklisted from ever owning a limited company again.
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wait what.
 
I dunno what gweedo's talking about. If you fuck up and can't afford your tax bill you can do extensions and payment plans until you're blue in the face.

You gotta fuck up REAL bad to actually get in legal trouble. As in KNOWINGLY fuck up. Sure, you might be paying some interest that you don't wanna pay, but no one gets their property taken by the irs because they're short a few grand come april 15th.
 
Hire an accountant, have a lawyer friend draft a terms and conditions contract for your 'client' (former employer) to agree to pay you in accordance to, while becoming an independent contractor. Also, the former employer will likely try to contract you in a Net 90, don't let them pull that shit. Net 30 or 5% increase in bill for every 30 days after upto Net 90. They sound not smart, so they may go for it.
 
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Gweedo said:
Pros
You get to pay your own tax, which means you pay less than you would as an employee of a company
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Uh, what? As an independent contractor, ie self-employed, you have to pay more taxes. As an employee, you only have to pay half of the ~15% of employee taxes. As self-employed, you have to pay all ~15%
 
The key is deductions for shit, as someone mentioned. You can even get deductions for your health insurance.
 
JoMo said:
The key is deductions for shit, as someone mentioned. You can even get deductions for your health insurance.
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woo a whole 2k in deductions. Considering an employer will usually pay about half, you are behind quite a bit. And if you don't actually have many job related expenses (which OP probably doesn't- "social media"), you'd better have a mortgage or you're taking the standard deduction and gaining nothing.

Being self-employed is not some tax haven, it's more responsibility, more money, and more taxes--and only more money because the employer is not paying half of those taxes or health insurance and other benefits.
 
This is a great way for them to screw you out of getting paid altogether. If they are nearing bankruptcy, and it sounds as if they are, employees are in one of the highest tiers of creditors who get at least something. As a subcontractor you might never see anything.

W/E, I've done it before

sent from my TalkaTap using phone.
 
ThunderDawg said:
This is a great way for them to screw you out of getting paid altogether. If they are nearing bankruptcy, and it sounds as if they are, employees are in one of the highest tiers of creditors who get at least something. As a subcontractor you might never see anything.

W/E, I've done it before

sent from my TalkaTap using phone.
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ya see its the dirty dog angles like this i was looking for

idkkkkkk.... i think id rather just stay on payroll, if they get more than 2-3 weeks behind give my two weeks and strong arm for backpay
 
In the dotcom bust, the finance co. I worked for hired a subcontractor to fix the y2k thing at the last minute. He worked a couple weeks in late December, we owed him $15k and then we filed bankruptcy the beginning of January. As an employee at the time, we were guaranteed $2k of back pay in order to stay til the end (which they had to pay us every Friday thru that day in order to keep things going). But the subcontractor got screwed out of all of his money, and the CEO did that to him on purpose.

sent from my TalkaTap using phone.
 
Ixiterra said:
woo a whole 2k in deductions. Considering an employer will usually pay about half, you are behind quite a bit. And if you don't actually have many job related expenses (which OP probably doesn't- "social media"), you'd better have a mortgage or you're taking the standard deduction and gaining nothing.

Being self-employed is not some tax haven, it's more responsibility, more money, and more taxes--and only more money because the employer is not paying half of those taxes or health insurance and other benefits.
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eh.

It does, of course, come down to the simple math of do your deductions cancel out the self employment tax - the deduction for the self employment tax, but it's not as bad as you're making it out to be.

The mortgage is a non-issue. Deducting business expenses does not preclude you from taking the standard deduction as it does with the general w-2 earners choice to 'itemize vs standard deductions.'

If my only business expense was $500 worth of mileage a year and I did not have a mortgage(or other itemizable deduction) I could write off the $500 against my business income AND take the standard deduction.
 
dude it sounds like you need to man up and get a fucking stable job. i get taking risks and shit but you come off as wanting to stay on board out of sheer fucking laziness lol
 
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