[newnhdad]

I have a great opportunity, the only downside is that I will be a 1099 independent contractor. Since I have no experience in this aspect of self employment so if any of you could share any experiences, good or bad, that would be helpful.

[gspurlock]

I’ve been a 1099 contractor several times and for over a decade at my latest contract. It’s no big deal. Just make sure to set aside as much money as you think you’ll need and send it in quarterly with the quarterly estimate forms. You can base it on your last year’s income tax. If your rate is a lot higher, you can bump it up a bit.

[Fester Chugabrew]

I worked that way in 2018. Tell me a little about the type of work you will be doing.

[ARW]

1099 got real lucrative when Trump reduced the deductions for W-2 employees. My advice is to set up an LLC and make sure you include dba your full name.

[Kenny500c]

You will have to pay into SS but not necessarily a bad thing if you collect later on.

[PeterPrinciple]

Right up front your are responsible for a 15.3 percent se tax and federal income tax and state income tax. rought ROT about 40-50% taxes and you keep 50-60%

Your potential liabilities that you need insurance?

if you have employees, a whole host of regulations.

[datura]

If possible, file as an S-Corp. Have a GOOD accountant.

[HighSierra5]

Only accept cash.

[chiller]

Do it. Independance, freedom. limited govt. interference.

We sold 10 million $ of imports over 20 years, which isn’t overwhelming by any means but we had no , nada , employees. We did bust our butts, but when we chose to do so generally.

We started from scratch so taxes were non-existant at first. We chose the S-Corp route.

Do it.

[Attention Surplus Disorder]

It’s not the biggest of big deals. The main add’l burden is in recordkeeping, and of course you have to pay SE tax which amounts to almost/about double what you are paying now in SS taxes. You could: Go to irs.gov, download and fill out form SE for 2020/2021 and see what that number would be. Or, probably easier, if you use TurboTax or equiv, buzz through and fill out a fake return using the numbers from your last return and see what they would be. You have to stay on top of quarterly tax prepayments, which are ordinarily covered by your employer withholding the various taxes and remitting them per the employer schedule. YOU become in charge of that activity, and the irs is not friendly towards underpayment of estimated taxes.

If you are planning any sort of home refi, do/get it now. It is harder to refi as a 1099 borrower than a W-2 employee.

I myself am definitely NOT a fan of taking a home office deduction, but a very large number of things become deductible on what will become your MAIN reporting from, schedule “C”, or something akin to Sch C if you start to report as a “S” or “C” Corp.

Find out and price out if you will be required to obtain any sort of insurance as part of your new “thing”.

[Alberta's Child]

I've been self-employed for more than five years after leaving a senior management role in the corporate world. What is your professional field? Do you have any particular questions? If not, I'll give you my two cents on the experience ...

1. Think of all the things an employer usually does for you ... administrative work, payroll processing, advertising, paid time off, insurance (both medical and professional liability), etc. Now make sure you're OK with having none of that done for you. These costs can be daunting if you are on your own.

2. Is this a long-term assignment for you? If not, make sure you are OK with a very irregular revenue stream as you move from one assignment to another and spend (potentially) many hours chasing your next job.

3. I have found that the best quality you can have as a 1099 contractor is attention to detail with you record-keeping. This is especially true with your financial records. Track your company-related expenses meticulously. Use a separate credit card for all business transactions so you can track them easily.

4. Get yourself a new Employer Identification Number (EIN). Depending on your field and the laws of your state, it is probably preferable to do business as a limited liability company (LLC) that is organized as a sole proprietorship. This means your income and expenses will be tracked separately but will be reported on your personal tax return.

5. IMPORTANT: When you are self-employed you are responsible for paying the Social Security and Medicare taxes for both the employee and the employer. Make sure you keep enough funds in reserve to cover these taxes every quarter.

6. Don't let your skills get stale. Dedicate a portion of your time every month (or even every week) to keeping your skills updated.

7. I have found that dedicating a specific period of time to do administrative work helps me keep up with tasks that don't directly involve client work. Use your Saturdays to do your filing, pay bills, update your company records, update your company marketing materials, etc. I try to keep Friday afternoons open to catch up on reading articles, journals, magazines, etc. in my field. If a Friday schedule gets too crowded for reasons outside my control, I add that to my Saturday task list.

8. Stay focused and disciplined, but don't burn yourself out. Make sure you keep yourself physically active as much as possible. Schedule "off" time within a day -- even if it's just a few periods of 15 minutes to an hour for exercise, meals, etc.

[max americana]

same here. 1099 is the a great opportunity. You are not an employee and you can deduct whatever expenses you deem fit such as lunch at Burger King (yup, I did that numerous times and no audit). Downside is (depending on you) is there are no medical benefits from your previous company.

If you pay attention of why there is a supply chain issue is because CA charges truckers who are MOSTLY independent contractors to pick up at the port of Long Beach which controls the west coast USA. Good luck on being a free man.

[McGavin999]

Best thing I’ve ever done. Just make sure you set aside for taxes and be aware you pay both sides of FICA and Medicare. Keep meticulous track of all expenses and make sure you have receipts.

[Recovering_Democrat]

We set aside 25% of every paycheck and file quarterly payments.

Our experience is, if you can, make those quarterly payments the SAME AMOUNT every time. Our work is seasonal, so there are leaner quarters than others.

But when you file taxes in April, it seems to make the process smoother.

[Pollard]

Freedom or it can be.

Pretty simple. You fill out a 1099 that a contractor gives you, the subcontractor. At the end of the year, they send you a W9 which is similar to a W4.

I used to just figure 25% was my IRS taxes but I was blue collar and bought a lot of tools, a 1 ton truck etc which reduced my tax rate. Keep in mind, this was in the mid 90s and my income was $40-50k/yr.

Save all receipts for anything you can write off. You don't get any types of benefits. You are responsible for all withholding. IRS income tax is the only one you're required to pay I think but check on that one. I think medicaire and SS are voluntary for self employed people but you can pay into them. Like I said, check on that because I'm not 100% sure and it's been 16 years.

Aside from the above, your pay needs to allow for ALL expenses so don't let them low ball you. Most everything can be written off in some way. You'll also have extra hours for doing all the bookkeeping so keep that in mind.

Get yourself one of these from any office store.

With that, all you're receipts saved and your W9(s) saved, you can do your own taxes IF you're the type of person who does their own 1040/1040a with possibly a Schedule * form added. If you already have someone do your taxes then they will love you for having the above. That book will also help you understand things.

[The Westerner]

You’ve received many excellent responses.

So I’ll repeat the one that will benefit you over the long run: find an independent CPA who is competent, friendly, and willing to answer your calls. You won’t need to call that person often, but it’s a relationship worth every penny it costs you. The CPA will provide you envelopes and coupons to send your quarterly tax payments to the feds. And guide you through decision making re: becoming a corporation or just filing a Schedule C.

Best of luck, Newnhdad!

[PAR35]

Depending on where you live, taxes (including social security) are going to be close to 50% of your ‘income’. No match for retirement money, you’ll need to fund retirement yourself.

So what ever you get paid, expect to be able to use about half of it.

[gloryblaze]

Number one advice is to marry someone with employee paid family medical insurance. J/k, but it really, really helps.

[chuck allen]

If it’s really a great opportunity then don’t be afraid of the taxes, just know that you owe them like you would if it was a paycheck, only you are going to be responsible to pay them.(every 3 months instead of weekly). Really not a big deal with proper preparation.

Find an accountant. Get yourself familiar with IRS forms, 1040, Schedule C, Schedule SE. and 1040-ES, and possibly others depending on what you are doing. Use 1040-ES payment coupons on Jan 15, April 15, June 15, Sept 15 to mail in your quarterly taxes. Use IRS tax tables in the instruction book or online along with the forms I mentioned above and if you put in the correct gross income numbers you will have a good idea what to pay.

Bonus if you drive for this and can write off mileage. Turbo Tax is probably worth the $150 as a fall back if you don’t feel up to it. They will walk you through it and prompt you to find deductions you might not think about. They might include your State Taxes free.

My point is don’t pass it up over taxes, they are easily taken care of. Just takes diligence.

[Carriage Hill]

I went Sub-S Corp for 23yrs, with 604 employees over that period. 1099 wouldn’t have worked.

[spacejunkie2001]

Get a decent CPA that will set you up and it’s a breeze. I pay mine about $75/mo and they do all my monthly/quarterly taxes (my annual taxes cost me more). I also highly recommend you get incorporated (ie Newndad LLC) which should save you good money. You’ll pay yourself a salary and your cpa can, again, set that up.

I’ve been a 1099 since 1989 and I LOVE it. I would have it no other way as you really control your own density (purposely misspelled :D)