IS 1099 RIGHT FOR ME? 2 Working as a 1099 contractor is a personal decision. Many independent contractors enjoy the freedom that 1099 work provides; reporting to themselves, creating their own hours, and the ability to decide what work they are interested in. However, 1099 work can also come with increased responsibilities, like paying quarterly taxes, enrolling in private healthcare, and manging business expenses (using your own equiptment and tools). It’s important to consider your current financial picture and familial obligations before agreeing to take on 1099 work. WHAT IS A 1099 CONTRACTOR?A 1099 contractor is an independent worker who contracts with an organization to complete special projects. You may have heard this work referred to a “freelance” (like news columnists or social media managers) or “gig” work (like Uber and DoorDash). 11099 WORK THE BASICS OF 1099 CONTRACTOR Works for themselves; considered a partner/consultant/contractor Typically part-time, but hours can vary; you set your own schedule If you are seeking work, you can share your rates. Alternatively, you may apply to projects/work with pre-established rates. Pay is typically received upon completion of work or at a pre-determined interval. You are responsible for paying your taxes You are responsible for health benefits, retirement Choose your own work; use your own suppliesWorks for an organization; considered an employee Can be full time or part-time, pre- determined or varying schedule Employer determines pay and pay schedule (ex. $15/hr, paycheck every 2 weeks) Employer withholds taxes Employer may provide benefits (health insurance, PTO, retirement fund) Employer supplies tools, equipment, and training W2 EMPLOYEEVSVS 1BECOMING A 1099 CONTRACTORBecoming an independent contractor can be as easy as seeking work as an individual (doing business as yourself and filing taxes under your social security number) and signing a contract with a business, or as complex as creating a business and registering it with the IRS. Learn more to decide which path is right for you. 1RESOURCES 1099 CONTRACTOR ESTIMATED TAXES 1099 contractors are responsible for paying their own taxes. Like W2 employees, 1099 contractors will receive a 1099-NEC for each contract/project they work during a calendar year. It is recommended that 1099 contractors pay quarterly taxes (federal, state, and local, as applicable) to avoid penalties. For more information: IRS; Article; Estimate Calculator2 1099 CONTRACTORS’ RIGHTS Like W2 employees, 1099 contractors have rights. As you apply for and begin contracts, ensure that organizations are not managing you like an employee, otherwise, you will be entitled to employment status. For additional information into the legal rights of contractors: Article; IRS3 TIPS FOR SUCCESS Contracting can be valuable work, with benefits including the freedom to set your own hours, your own working conditions, and more! To ensure a successful start to 1099 work, consider: Reviewing your financial picture Discussing with family and friends Building an emergency fund Planning for taxes (paying estimated taxes) Additional success tips4 2
