Anyone Ever Worked as a Contract "Employee"

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Peter J. Porter

New member
Here are some more older pics of my car which I use FF on. More are in this post http://autopia-carport.com/forum/showthread.php3?s=&threadid=6575 , but I didnt want to clutter up that page with all the pics and these are much bigger.

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I cant wait to get my own digicam, these were all taken with my good friend Ben's camera, not bad for 1.3 megs, but it's hard getting good pics on those certain days you borrow it. A new Sony with 5+ megapixels:eek: is in my future, and I cant wait:D
 
Off topic of course, but I have a question for the board. Has anyone worked for a company as a Contract Employee? There is a company in town that has been up and running for over 4 years now, the owners used to work where I do now and they started this company up themselves. They are off and running and going great guns right now, to the point where they need a manager of the actual work, which is where I come into play. Well, the way they started the company, they don't have actual "employees", everyone works under a contract. They don't provide the normal benefits that you see elsewhere, but they create a "package" that compensates you for the amount it would take to go get those benefits on your own, such as insurance and stuff. That doesn't really effect me as I am going to be under my wife's insurance this year anyway because my current plan has sky rocketed.

Anyway, my biggest question is on the tax side I guess. I'm going to try to sit down with one of the current contract employees to get it straight, I don't think it's as complicated as I'm picturing it in my head, but it's just different.

I think the way they have it set up now is A GREAT benefit to the contract employees, financially. They actually met to discuss everyone becoming full time employees, but it was unanimous from them that they wanted to stay the way it was. I guess it provides flexibility that you normally would not get and also a way to use the expense package for some tax benefits.

Anyway, has anyone else worked like this? This is a GREAT opportunity for me to advance my career by leaps and bounds and also have a chance to really make a very comfortable living for me and my family all at the ripe old age of 33!

Any thoughts, suggestions would be GREATLY appreciated!
 
The benefit for the company with having contractors is they can let you go instantly without much effort. The government for some reason has laws about handling layoffs, advance notice, communication, discrimination, etc. The government does crack down on companies that have only contractors, etc since it is clearly done to avoid the above.

If they are paying you a salary plus cash for benefits it could cost you more since you will pay tax on this extra income. Workers with company provided benefits get the benefits untaxed now but some of that is changing.

Since you are already covered, this works for you plus in the end if you do not want to spend money on health, dental, life insurance, investments.
 
Thanks Bunky! The part I'm uneasy about right now is the tax side. I would have to engage with a CPA and figure out exactly what I need to do in order to not get bitten next April.

I'm not AS concerned about the lay off part as they have more work than they can handle right now and have about 2 years of solid backlog, which is key in this business. But, that is another hurdle that I'm struggling to get over, just the security of being an actual employee. I've let them know all of my concerns and I've been given all the right answers.

The fact that all 10 or so "employees" they have now were unanimous in their choice to NOT become traditional employees speaks volumes actually.

I just need to figure out what to do on the tax end, so I don't get screwed.
 
Whether someone constitutes an employee for tax purposes (withholding, workers comp, 1099 vs. W-2, etc.) vs. an independent contractor isn't based on how you classify them, but, rather, there's a number of factors that are looked at.

These factors basically revolve around control: do you control the when, where, and how of a person's work? If you tell them when to show up, where to show up, how to do their tasks, provide them with the tools to do their tasks, then they're probably an employee and subject to "employee" taxes. OTOH, if you just say, "hey, get this task X done and I'll see you in 2 weeks", then they're likely an independent contractor with a 1099.

I'm in California, and it's my understanding that they're cracking down on mis-classification of employees (to drum up more in taxes :( ); also, mis-classification could lead to further liability if the mis-classified employee would have been entitled to some benefit (typically minimum wage or accrued vacation if the company doesn't provide any other benefits) if they had been properly classified.

You may want to talk with a lawyer about your specific situation and see if the law of your state has any peculiarities.
 
Yes I did subcontract work for several chiropractors before getting into the detailing business .What I did was hire a tax accountant to help me get set up with quartily tax estimates . They know exactly what kind of deductiions your able to make and do all the math for you and in the long run saved me tons of money . So many things can be tax write offs depending on your business ! Start saving alll your recepts that pertain to your business, clothes ,gas , cell phone ect ect.

Make sure you stay really organized with all your receipts and records and it wont be such a nightmare come tax time.
 
detailchick said:
.What I did was hire a tax accountant to help me get set up with quartily tax estimates . They know exactly what kind of deductiions your able to make and do all the math for you and in the long run saved me tons of money . So many things can be tax write offs depending on your business ! Start saving alll your recepts that pertain to your business, clothes ,gas , cell phone ect ect.

Make sure you stay really organized with all your receipts and records and it wont be such a nightmare come tax time.
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Exactly what I do. I'm doing project scheduling at the Honeywell plant a couple days a week, so I pay my taxes quarterly. My accountant sends me a postcard reminder about a week before the estimated tax needs to be mailed in.
 
Luster said:
Exactly what I do. I'm doing project scheduling at the Honeywell plant a couple days a week, so I pay my taxes quarterly. My accountant sends me a postcard reminder about a week before the estimated tax needs to be mailed in.
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Very cool, I hope to get everything in writing this week, so I can have actual numbers to discuss with my CPA.

This is a chance to advance my career about 8 years and again, set my family up for the long haul. Fingers crossed!! :thumbup:
 
Good idea seeing a CPA. You will have to pay both the employer and employee portion of SS tax, about 15% total. Unless you have a written contract your employment is considered "At Will" and you can be terminated at any time for any reason with the exception of Fed and State discrimination laws. Caucasian male, good luck with that.
 
Husker Z said:
Very cool, I hope to get everything in writing this week, so I can have actual numbers to discuss with my CPA.

This is a chance to advance my career about 8 years and again, set my family up for the long haul. Fingers crossed!! :thumbup:
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Always a good plan.:biggrin:
 
You might need a W-9 done for them, but check with the CPA first. Hope this new job works out great for you Husker Z!
 
Thanks guys, we're still working through some of the logistics, but I think it could be an outstanding opportunity.

I think the "contract" part will be pretty temporary, it's only a matter of time until they turn everyone into full time employees.
 
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