Becoming an independent contractor means exactly what the name says, you are independent. This means that you govern your own business and are not reliant on another for your job. You are, however, still dependent on finding clients that employ your services to provide an income. There are multiple rewards to being self-employed. Independent contractors are sometimes referred to by other titles: freelancers, consultants, business owners and entrepreneurs.
Independent contracting is increasingly popular in today's financial situation. The major hiring cutbacks in the current economy play a large role. Highly employable people with an outstanding set of skills are finding that hiring is at a standstill. If you possess that entrepreneurial frame of mind, you can most likely think of a way to find business for your particular background.
There are several advantages to starting your own corporation. First, you can take greater tax deductions as a business. Second, federal and state income tax is not withheld from your pay by the IRS (this can be a disadvantage if you are not organized). Third, you have the possibility of getting paid more than regular company employees if you work hard. Finally, you are the boss. This holds the greatest appeal for some. After all, that is the American dream.
Hiring companies must complete a 1099 tax form for each independent contractor that is paid more than $600 a year. The name "1099" employee for an independent contractor is now common in the workforce. They conduct business under a different set of tax laws. These laws are often advantageous to the contractor.
Generally, independent contractors set up a Limited Liability Corporation (LLC). There are other options and speaking with a tax professional can make the guidelines clear. There are other important factors in structuring the organization. Find an accountant that can walk you through this. For instance, independent contractors do not have paycheck money withheld for the government. Instead, they are required to pay a quarterly amount. The home office deduction can reduce your taxes by a portion of your rent or mortgage. Find an accountant that can outline the benefits with clarity.
If you are facing an IRS audit or have other tax problems
, contact the experts at Guardian Tax Resolutions today by visiting GuardianTaxResolutions.com
for a free consultation and quote.