Independent Contractor Advantages
As the titles suggest, an independent contractor is a person who works for themselves. You are not dependent on another person for your employment and you run your own business. Certainly, you are dependent on others for generating revenue to keep the company afloat. Working for oneself has distinct advantages. The names for an independent contractor alone imply the degree of freedom that comes with the territory: freelancers, business owners, entrepreneurs and consultants.
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.
Independent Contractors are often called "1099" workers due to of the tax form companies fill out for each independent contractor being paid more than $600 per year. They function under their own set of tax laws. Many of these rules work to the advantage of 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.
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