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1099 work and then a W2 employee. need advice

1099 work and then a W2 employee. need advice

1099 work and then a W2 employee. need advice

(OP)
I recently had a second interview for a position I was desperatly seeking. The company is good and I feel good about working there. They are currently checking references, but verbally offered me the position with the following;

work the remainder of the year (3 1/2 months) as a 1099 employee with no benefits. Then on Jan 01 of 2010, they would make me a W2 employee.

Are there any downsides or issues with being a 1099 employee?

I realize I am responsible for taxes for the 3 months and plan on negotiating a salary to account for some of that.

just browsing for some advice from those in the industry and in a similar situation.

Mark C.
 

RE: 1099 work and then a W2 employee. need advice

You'll have to deal with your own insurance, taxes, etc.  That's pretty much it.

Techcanilly as you will be a contract employee they can get rid of you at any point for any reason, and you won't be elegably for unemployment benifits (probably).

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RE: 1099 work and then a W2 employee. need advice

Mark,

You also get to take deductions,  which you will need some tax advise to navigate.  If they intend to keep you, it's no big deal.  It gives them a little more flexibility this year.  Also you will need to pay you're own Social Security taxes, again tax advise on that one.

Jim C.
 

RE: 1099 work and then a W2 employee. need advice

The following assumes you are in the U.S.

The company may be violating IRS laws by making you a 1099 contractor for that period of time. Why are they going that route for only 3.5 months? Are they trying to assess your abilities in that time? Are they trying to avoid paying the employment taxes? By law, when you are a 1099 contractor, they can not tell you what hours to work, how to do your job, and, you have to provide the tools to do the job. You can use their network but you would have to provide a laptop to connect to the network. If you're programming, you need to purchase the programming software such as .NET and use your own.

It really complicates the tax issues. You have to pay your share and the company's share of FICA. You do get 1/2 of the employer share back on the front of the 1040.

The IRS website is your best place for info. WWW.IRS.GOV.

I'd be very wary of being a 1099 for that short of time.





 

RE: 1099 work and then a W2 employee. need advice

(OP)
I called a CPA this morning and spoke with him. I got some good answers from him, just like you all suggested. I think the plan I have laid out is going to work. The CPA says a safe estimate Nationwide is about 15% savings on GROSS income.

Yes, the company wants to use is as an eval period.

I meet with the company today and spoke with them about the contract conditions. Everything is laid out in the contract. I wouldnt go into this situation unless it wasnt.

If this was a long term situation, I prob wouldnt be doing it. Since the company is stable, I have it on paper that Jan 01 I will be a W2 employee, get benefits, etc I think I will survive.


 

Mark C.
 

RE: 1099 work and then a W2 employee. need advice

Congratulations on your new job.

One thing, though. Most companies hire you as an employee and use 3 to 6 months as a probationary period to try you out. I still think it's weird to 1099 you for such a short time. But, that may be just me. thumbsup

Good luck.

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