So let me ask you this: as a contractor, do you sleep/live/eat/live your job then? Because what you're describing to me sounds like you enjoy being your own boss, and taking on all the responsibility that comes with it. The way you describe having to track all of your expenses, hold aside revenue made due to taxes, and then having to sit down and either do your own taxes or hire a CPA to do it, plus itemize all your expenses, plus make sure you've got gigs lined up once the current one ends, plus money set aside for dry spells (which will come), appears to me to be almost all-consuming and similar to the necessary habits of a lot of SMB owners I've known (who for the most part are cantankerous bastards who think everyone's robbing them blind, work 90 hours a week, and force their private/family life to conform to the demands of their work life). Do you honestly enjoy what you do then?
Yes.
It really isn't all that hard. I have a log book in my car, I jot down my odometer daily to show how many miles I drive.
At EOY, I go through Amazon and my business CC's and figure out things I"ve bought...and I write off my business internet connection at home, and my cell phone (business account). That's most of it. I send that and my info on my HSA to myCPA and she gets it together for me to sign and mail out.
The only other hassle really, is once a Quarter I have to report and pay taxes to Feds and State, but that's all electronic now, so just takes a few minutes.
I'm not really that organized of a person...and I can do it. Heck, if you don't even want to bother with payroll...you can farm that out for a usually reasonable fee too.
What you try to do, is get on with federal contracting, helps if you are a US citizen and can pass a background check.
Those are multi year jobs..often a decade or more if you land the right ones.
So, yes, it is great. And sometimes you switch between W2 and 1099 with some different contracting houses, but it isn't THAT difficult to find jobs. ESPECIALLY if you are older and have a resume with a long work history.
I stand corrected,by your language and posts in the past, I assumed you were UK.
:)
Well, to each his own, I don't see anything moral or ethical one way or the other using every legal means there is to keep as much money as I can that I make for myself. It isn't the govts money, it is mine. They didn't earn it, I did.
I didn't earn it for society either, I earned it for me.
Don't get me wrong, I enjoy being charitable with both time and money. I prefer to have that 'choice' and not have the govt force me to do so.
But it is money, plain and simple, and I see nothing that involves ethics in any fashion with regards to how much I keep and how much I have to give to the govt.
On that note I'm aware of most of what you said except... why would you want to do an S corp over an LLC?
See some of my other posts on here, for more details on this, but briefly, one big reason is to save how much you pay in employment taxes (SS and medicare).
Example:
You bill out $100K. You pay yourself a 'reasonable salary' per IRS standards, of say, $40K.
You pay state, fed and employment taxes on this $40K.
At EOY, the remaining $60K (minus all tax deductions,etc) falls through on your personal taxes, and you only pay state and fed taxes on this, NO employment taxes on this remaining amount.
It is a great and quite legal way to save money. Just keep good records and have a good CPA (whose services are also tax deductible).
I believe this is not an option with LLC, you pay employment taxes on ALL billed income.
You made $100k, you should pay your taxes on all of that. Yes, that means SS and medicare too. Income that my employer paid me vs what you paid yourself then kept as profit should all be treated the same.
Well, when you move to the US and become a citizen working here, they vote for that.
I don't see a problem at all..with this, I'm taking more risks and more responsibility for my own finances and taxes, liability, etc. I don't see a problem with keeping more of my hard earned dollars.
And a corporation, is a corporation, no matter if it is one person, or a 1000.
Also, nothing wrong with working within the laws to keep as much as you can.
That being said, sure, I'd be for real tax reform. Take out ALL, and I mean ALL deductions. You make x$, you pay y% of it...plain and simple.
No deductions for kids, houses yachts, etc. Possible exception, would be no tax on food. Simple and easy, and no longer letting the govt try to use taxation exemption to try to drive behavior, I hate that. Tax just enough for proper govt function, and then for the most part, stay out of my way and out of my life.
Joke's on me of course since 1099 contractors get taxed out the ass such that basically all my gross gains go right to the g-men. Hooray.
I missed this part on my original reply to you.
Are you incorporated? If so..how? LLC? "S"corp?
If you're doing it right..you can save a LOT of money from the tax man. As I've mentioned in other posts, if you are "S" corp, you can save yourself paying employment taxes on a lot of your billing income (don't pay SS and medicare on all of your billing income), and you write off everything.
Anyway, saw this mentioned and sounds like you have done 1099 a lot, so wondering why you're paying so much in taxes? Do you have a good CPA?
Yep, one problem people can't seem to get through their heads is...there are plenty of jobs. You have to be willing to go WHERE the jobs are.
The day of a job for life, in one area (even the same state often) are long over, and you have to be flexible and willing to move and change jobs, especially if you are W2, that is the only way to really grow salary or position.
Contracting, I like better, you negotiate your own rates, and rules. A bit more work, but worth it.
In meantime, you're working your 55+ hours a week with the too frequent 80 hour weeks because your employer refuses to hire an entry level kid to do your grunt work.You're tired. You have to keep up with your job. Take a class? Hardly! Study on your own? Too tired. You NEED to get away from the computer sometime!
Sounds like this person needs to change jobs!!
If you're good, they are out there to be had. You also have to be flexible enough to move to where the new job IS.
With telecommuting becoming so popular, this isn't the burden it used to be either.
Oh bull shit. Unions do try to change laws. The difference is, we don't have the deep pockets that our employers do, so we can't afford the politicians. Most workers represented by unions aren't at a union shop: membership is optional. However, in these workplaces, the union still represents nonmembers, who still get all the negotiated benefits and wage increases that the union fights for. If unions were as self-serving as you suggest, this would not be the case. We fight for everybody we can, stand in solidarity with other unions, and work to change the law in the favor of all workers wherever possible.
As long as it is optional.
I'm quite able to negotiate my own terms of employment, thank you. That's why I prefer contracting..the freedom is worth it to me.
I'm confused as to what the difference is in general, aside from job security.
1099 contractor vs W2 employee.
This thread has a good definition of how the IRS classifies you. Take a look for one of my other posts on this thread to see some details of how you approach doing this by incorporating yourself, and doing the different taxation methods.
One big thing is...with 1099, you get paid your full bill rate, and it is up to you (or your own corp if your smart) to pay taxes out of it, they aren't withheld from your 'paycheck' like they are with W2 employees.
I think that is one reason more and more, the Feds are trying to make it harder for the independent contractor. They sure don't want the majority of people in the US working this way...sad, but true.
Given the choice, I'd work 1099 and manage my own finances ANY DAY of the week. The benefits to me are worth the extra effort and trouble.
That is the standard in the USA as well.
It is not however enforced at the federal level, and not all states even require it.
The simple fact is in most place in the USA not doing that will impact your ability to retain workers.
Well, if you are truly a contractor (1099 vs normal W2 employee), you negotiate your bill rate to cover you for your expenses (vacation time, sick time, insurance needs, etc).
There is a bit more paperwork involved and you have to be adult enough and responsible enough to document, do paper work, hire a CPA (good advice, and hell, it is a tax write off), but in the end, you have much more freedom, and it is about the only way left in the US to save more of your hard earned dollars.
I love it when I can do it..unfortunately some court cases (the Microsoft one in particular) scared off a lot of companies from doing the contractor thing. Best thing to do, is incorporate yourself..and do corp to corp 1099...which puts a nice legal distance between you and the company you want to work with...
As I've alluded to before, one thing to look at, is to set yourself up as a subchapter "S" corp, and don't go LLC. This way you can save a good bit of money on employment taxes (SS and medicare).
Example, you bill $100K in a year.
You 'pay' yourself (assuming a 1 person corp) a 'reasonable salary' (per the IRS) of about $40K. You pay state, federal and employment taxes on this amount.
At EOY, the remaining $60K falls through on your personal taxes (minus all the deductions, etc). On that last amount of money, you only pay your state and federal taxes, but no SS or medicare out of those dollars.
That can prove to be significant. Not to mention, you can write off damned near any expense, all perfectly legal.
Sure you have to do record keeping, and paperwork, and set up accts with the feds and often your state for electronic accounting for wages and taxes, but that is worth it in the end, too keep more of your own money.
I don't think you're correct on the requirements either, however I just wanted to say that most employers whether required or not do this to stay competitive in the job market pool.
A slightly related example is health insurance, I've noticed that most places that have called me that DON'T have it are almost immediately up front about it as they've experienced the lack of health insurance to be an instant dis-qualifier for them as an employer to potential employees for whom that's important.
Well, not necessarily. If you are a contractor, you negotiate your bill rate to cover your costs for insurance, vacation and sick time off...that's why bill rates are high for contractors, or at least on surface it appears they are making TONS more money that normal W2 employees.
But it can be a sweet deal. I have incorporated myself, and love it when I can do the 1099 corp to corp deal. I get a nice high deductible insurance policy, say $1200, and that qualfies me to set up a HSA (Health Savings Account) into which I sock the max pre-tax dollars I can (approx $3K a year?). Out of that, I pay my regular meds and maintenance trips to the dr, dentist..etc. I usually tell them I'm paying myself and they have often given me like a 15% discount right off the top.
Anyway, HSA, unlike FSA...are not use it or lose it..they grow and grow with you, and at retirement, if you have it all built up due to being healthy...you can convert it to retirement dollars.
Also, with contracting...you get to write off everything. And, if you look into it..set yourself up as a "S" corp, and you can save paying alot of SS and medicare (employent taxes).
When you go into contracting, you are the employer and employee, and you have to think of it that way when doing billing rates and paperwork, sure it is a bit extra work, but if you are good at what you do, it is one of the last ways in the US to actually keep more of your hard earned money from the tax man.
Although..the current administration is trying to chink away at that foundation too unfortunately.
How would your livelihood be threatened if your PC was wiped? I guess you don't keep regular backups, which is the most idiotic thing I have heard all week.
It isn't so much a person's personal PC that is the danger, but of having his bank disrupted, and he can't get money. If food distribution is messed up, if drugs can't be accessed...all this stuff is interconnected.
Let's see what happens when some extremely urban center gets hit, say like NYC...the power goes out, food can't get in/out, and see how long it takes for things to go bad really fast.
Hell, with so many out there living cashless....what are they going to use for payment for things, if that system is down for awhile? That alone would bring a lot of misery, even if you discount the more tragic events I put forth above.
He didn't travel. So there's a shit load of savings right there.
I love the distortion too. No mention that it is part of the "In performance at the White House" program has been around since 1978 and airs on PBS and American Forces Network nor that "Corporate funding for this program is provided by Pepsi-Cola. Foundation support is provided by The Annenberg Foundation and the Anne Ray Charitable Trust. Major funding is also provided by the Corporation for Public Broadcasting, PBS and public television viewers. Support programming like In Performance at The White House through your local PBS station."
I'll grant you the traveling part....that cost a ton each time AF1 is warmed up.
But all this sponsorship you mentioned, I'm guessing may have been to pay performers, and/or for the production of the filming and processing of the resultant TV show, but all the security, decorations, food,drinks...etc, I'm guessing cost a pretty penny.
I seriously doubt that any part at the white house takes place for much under $1M.
If nothing else, tho..it just looks bad.
The country in debt, the president at times asking the normal citizens to tighten their belts, to keep their tires aired up on their cars...recession, high unemployment, and yet, we see plenty of publicity shots of him and the first lady playing golf, traveling the world spending ungodly amounts of money (have you see the tabs on some of Michelle's world vacation travels?), and throwing lavish celebrity parties in the white house.
I would think the president showing some austerity would be the prudent or at least THOUGHTFUL thing to do, no?
Yet, none of these sequester cuts seem to keep the Obama White House from partying like there is no tomorrow. The one last night was an all star blow out.
Well, maybe we *need* extra laws in this case, like the Bill of Rights to emphasize citizen's rights, etc.
How about we pass laws right NOW, to ban electronic/robotic/unmanned traffic surveillance?
How about another idea, rather than have all funds collected for traffic fines, rather than go to the police coffers (a bit of conflict of interests no?), that at the EOY, they take all that money, and give it back to all of the citizens who did not have a traffic fine collected from them? I wonder how gung-ho law enforcement would be to put so much effort into this if they didn't reap the benefits of it?
I'm tired of the new police motto "to collect and serve"....
Bigger crabs and lobster, and someone thinks this is a bad thing? I am going outside to rev my SUV for a while...
My thoughts exactly!!
My first thought on reading this was "Hey, there is an upside to this whole global warming thing". Why is it that anytime green house gasses, etc are discussed, that everything is gloom and doom?
Everything has balance, let's look at the good things for instance.
A softshelled crab that would fill a plate all by itself?
Higher education today is more about getting credentials for employment than about actually learning something you are passionate about.
What do you mean today?
It's pretty much always been that way...at least in the US.
Unless you have a wealthy family with inherited money to fall back upon, you go to college as the next step through the gateway to get employment for a "real job" (if you've ever worked food service, you know what this means).
Sure, you hope you learn something along the way, but so far, most people I know, their current and successful careers, have little or nothing to do with their undergraduate degrees, self included. But you gotta have that diploma to get your foot in that door for your first real job in most cases, no matter what it is.
Slashdot Mirror
As far as work ours...I work a solid 40 hours a week, rarely is there OT required.
Yes.
It really isn't all that hard. I have a log book in my car, I jot down my odometer daily to show how many miles I drive.
At EOY, I go through Amazon and my business CC's and figure out things I"ve bought...and I write off my business internet connection at home, and my cell phone (business account). That's most of it. I send that and my info on my HSA to myCPA and she gets it together for me to sign and mail out.
The only other hassle really, is once a Quarter I have to report and pay taxes to Feds and State, but that's all electronic now, so just takes a few minutes.
I'm not really that organized of a person...and I can do it. Heck, if you don't even want to bother with payroll...you can farm that out for a usually reasonable fee too.
What you try to do, is get on with federal contracting, helps if you are a US citizen and can pass a background check.
Those are multi year jobs..often a decade or more if you land the right ones.
So, yes, it is great. And sometimes you switch between W2 and 1099 with some different contracting houses, but it isn't THAT difficult to find jobs. ESPECIALLY if you are older and have a resume with a long work history.
Fucking feds....
I formed a normal corporation with the state, then filed papers for subchapter S for the feds.
I stand corrected,by your language and posts in the past, I assumed you were UK.
Well, to each his own, I don't see anything moral or ethical one way or the other using every legal means there is to keep as much money as I can that I make for myself. It isn't the govts money, it is mine. They didn't earn it, I did.
I didn't earn it for society either, I earned it for me.
Don't get me wrong, I enjoy being charitable with both time and money. I prefer to have that 'choice' and not have the govt force me to do so.
But it is money, plain and simple, and I see nothing that involves ethics in any fashion with regards to how much I keep and how much I have to give to the govt.
See some of my other posts on here, for more details on this, but briefly, one big reason is to save how much you pay in employment taxes (SS and medicare).
Example:
You bill out $100K. You pay yourself a 'reasonable salary' per IRS standards, of say, $40K.
You pay state, fed and employment taxes on this $40K.
At EOY, the remaining $60K (minus all tax deductions,etc) falls through on your personal taxes, and you only pay state and fed taxes on this, NO employment taxes on this remaining amount.
It is a great and quite legal way to save money. Just keep good records and have a good CPA (whose services are also tax deductible).
I believe this is not an option with LLC, you pay employment taxes on ALL billed income.
Well, when you move to the US and become a citizen working here, they vote for that.
I don't see a problem at all..with this, I'm taking more risks and more responsibility for my own finances and taxes, liability, etc. I don't see a problem with keeping more of my hard earned dollars.
And a corporation, is a corporation, no matter if it is one person, or a 1000.
Also, nothing wrong with working within the laws to keep as much as you can.
That being said, sure, I'd be for real tax reform. Take out ALL, and I mean ALL deductions. You make x$, you pay y% of it...plain and simple.
No deductions for kids, houses yachts, etc. Possible exception, would be no tax on food. Simple and easy, and no longer letting the govt try to use taxation exemption to try to drive behavior, I hate that. Tax just enough for proper govt function, and then for the most part, stay out of my way and out of my life.
I would go for that.
I missed this part on my original reply to you.
Are you incorporated? If so..how? LLC? "S"corp?
If you're doing it right..you can save a LOT of money from the tax man. As I've mentioned in other posts, if you are "S" corp, you can save yourself paying employment taxes on a lot of your billing income (don't pay SS and medicare on all of your billing income), and you write off everything.
Anyway, saw this mentioned and sounds like you have done 1099 a lot, so wondering why you're paying so much in taxes? Do you have a good CPA?
The day of a job for life, in one area (even the same state often) are long over, and you have to be flexible and willing to move and change jobs, especially if you are W2, that is the only way to really grow salary or position.
Contracting, I like better, you negotiate your own rates, and rules. A bit more work, but worth it.
Sounds like this person needs to change jobs!!
If you're good, they are out there to be had. You also have to be flexible enough to move to where the new job IS.
With telecommuting becoming so popular, this isn't the burden it used to be either.
And...incorporate yourself!!!! Do this for the protection, and the tax breaks.
As long as it is optional.
I'm quite able to negotiate my own terms of employment, thank you. That's why I prefer contracting..the freedom is worth it to me.
1099 contractor vs W2 employee.
This thread has a good definition of how the IRS classifies you. Take a look for one of my other posts on this thread to see some details of how you approach doing this by incorporating yourself, and doing the different taxation methods.
One big thing is...with 1099, you get paid your full bill rate, and it is up to you (or your own corp if your smart) to pay taxes out of it, they aren't withheld from your 'paycheck' like they are with W2 employees.
I think that is one reason more and more, the Feds are trying to make it harder for the independent contractor. They sure don't want the majority of people in the US working this way...sad, but true.
Given the choice, I'd work 1099 and manage my own finances ANY DAY of the week. The benefits to me are worth the extra effort and trouble.
Well, if you are truly a contractor (1099 vs normal W2 employee), you negotiate your bill rate to cover you for your expenses (vacation time, sick time, insurance needs, etc).
There is a bit more paperwork involved and you have to be adult enough and responsible enough to document, do paper work, hire a CPA (good advice, and hell, it is a tax write off), but in the end, you have much more freedom, and it is about the only way left in the US to save more of your hard earned dollars.
I love it when I can do it..unfortunately some court cases (the Microsoft one in particular) scared off a lot of companies from doing the contractor thing. Best thing to do, is incorporate yourself..and do corp to corp 1099...which puts a nice legal distance between you and the company you want to work with...
As I've alluded to before, one thing to look at, is to set yourself up as a subchapter "S" corp, and don't go LLC. This way you can save a good bit of money on employment taxes (SS and medicare).
Example, you bill $100K in a year.
You 'pay' yourself (assuming a 1 person corp) a 'reasonable salary' (per the IRS) of about $40K. You pay state, federal and employment taxes on this amount.
At EOY, the remaining $60K falls through on your personal taxes (minus all the deductions, etc). On that last amount of money, you only pay your state and federal taxes, but no SS or medicare out of those dollars.
That can prove to be significant. Not to mention, you can write off damned near any expense, all perfectly legal.
Sure you have to do record keeping, and paperwork, and set up accts with the feds and often your state for electronic accounting for wages and taxes, but that is worth it in the end, too keep more of your own money.
Well, not necessarily. If you are a contractor, you negotiate your bill rate to cover your costs for insurance, vacation and sick time off...that's why bill rates are high for contractors, or at least on surface it appears they are making TONS more money that normal W2 employees.
But it can be a sweet deal. I have incorporated myself, and love it when I can do the 1099 corp to corp deal. I get a nice high deductible insurance policy, say $1200, and that qualfies me to set up a HSA (Health Savings Account) into which I sock the max pre-tax dollars I can (approx $3K a year?). Out of that, I pay my regular meds and maintenance trips to the dr, dentist..etc. I usually tell them I'm paying myself and they have often given me like a 15% discount right off the top.
Anyway, HSA, unlike FSA...are not use it or lose it..they grow and grow with you, and at retirement, if you have it all built up due to being healthy...you can convert it to retirement dollars.
Also, with contracting...you get to write off everything. And, if you look into it..set yourself up as a "S" corp, and you can save paying alot of SS and medicare (employent taxes).
When you go into contracting, you are the employer and employee, and you have to think of it that way when doing billing rates and paperwork, sure it is a bit extra work, but if you are good at what you do, it is one of the last ways in the US to actually keep more of your hard earned money from the tax man.
Although..the current administration is trying to chink away at that foundation too unfortunately.
linky
Sounds like we could cut the White House budget by quite a bit more then....
Hmm..just looked on my home linux box I recently set up to play with....bydefault, with OpenSSh...it appears that is set to yes by default.
Just changed that and rebooted.
It isn't so much a person's personal PC that is the danger, but of having his bank disrupted, and he can't get money. If food distribution is messed up, if drugs can't be accessed...all this stuff is interconnected.
Let's see what happens when some extremely urban center gets hit, say like NYC...the power goes out, food can't get in/out, and see how long it takes for things to go bad really fast.
Hell, with so many out there living cashless....what are they going to use for payment for things, if that system is down for awhile? That alone would bring a lot of misery, even if you discount the more tragic events I put forth above.
I'll grant you the traveling part....that cost a ton each time AF1 is warmed up.
But all this sponsorship you mentioned, I'm guessing may have been to pay performers, and/or for the production of the filming and processing of the resultant TV show, but all the security, decorations, food,drinks...etc, I'm guessing cost a pretty penny.
I seriously doubt that any part at the white house takes place for much under $1M.
If nothing else, tho..it just looks bad.
The country in debt, the president at times asking the normal citizens to tighten their belts, to keep their tires aired up on their cars...recession, high unemployment, and yet, we see plenty of publicity shots of him and the first lady playing golf, traveling the world spending ungodly amounts of money (have you see the tabs on some of Michelle's world vacation travels?), and throwing lavish celebrity parties in the white house.
I would think the president showing some austerity would be the prudent or at least THOUGHTFUL thing to do, no?
Shutdown White House Tours - Check
Yet, none of these sequester cuts seem to keep the Obama White House from partying like there is no tomorrow. The one last night was an all star blow out.
I wonder how much that one cost the tax payers?
How about we pass laws right NOW, to ban electronic/robotic/unmanned traffic surveillance?
How about another idea, rather than have all funds collected for traffic fines, rather than go to the police coffers (a bit of conflict of interests no?), that at the EOY, they take all that money, and give it back to all of the citizens who did not have a traffic fine collected from them? I wonder how gung-ho law enforcement would be to put so much effort into this if they didn't reap the benefits of it?
I'm tired of the new police motto "to collect and serve"....
My thoughts exactly!!
My first thought on reading this was "Hey, there is an upside to this whole global warming thing". Why is it that anytime green house gasses, etc are discussed, that everything is gloom and doom?
Everything has balance, let's look at the good things for instance.
A softshelled crab that would fill a plate all by itself?
YUM!!
Err, as opposed to what other countries do...that promote the interests of their citizens above all others?
Isn't that really what the basic function of a government is? To promote its interest above others in the world, when you get down to it?
What do you mean today?
It's pretty much always been that way...at least in the US.
Unless you have a wealthy family with inherited money to fall back upon, you go to college as the next step through the gateway to get employment for a "real job" (if you've ever worked food service, you know what this means).
Sure, you hope you learn something along the way, but so far, most people I know, their current and successful careers, have little or nothing to do with their undergraduate degrees, self included. But you gotta have that diploma to get your foot in that door for your first real job in most cases, no matter what it is.