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Hired as a subcontractor / contract labor, when you're clearly employed???
You as the worker, hold all the liability, without much control of the situation. Hey, no taxes and all that other crap withheld from your check. You get a much bigger check. But you have to pay taxes on your 1099's & deposits minus the paper trails for overhead expenses.
The business, has less overhead, rules and regulations, that are associated with an employee on the books, that adds to the bottom line. Nor do they have a fear of union organization.
If you had a choice and your employer is doing like a lot of employers and turning all their workforce into "contract labor" would you like it or hate it?
Ahhh yes! The looming consequences of Obamacare. Any business that can get away with workers as a 'sub-contractor', will. Welcome to the sea of Sched. 'C' and 1099 users.
They will ALWAYS find a way around the system, just like I've always said here.
For example, I'm in the process of selling a hotel we've had for numerous years. Rather than pay capital gains taxes on the property, we are doing a lease with option contract, with a suitable down payment, and a buyout at the end, lower than the price we paid for the hotel. We will then refinance the property, using the lease as accounts receivables, and set it up so that income covers the debt. Since borrowed money isnt taxable, I wont have any tax liabilities at any period during the transaction. I get my property sold now, all tax free.
A person I know owns a barber/hair style shop. Went from 14 employees to 14 sub-contractors. They now rent the chair for the day. No more SS payments, health care/obamacare worries, income tax with hold & quarterly payments, sick day pay, holiday pay, vacation pay. If they don't show up for work, it's their problem.
Real Estate brokers and many other businesses have been doing this for years.
How do small business owners protect themselves otherwise.
There are mandates coming down the road that will hit them in additional tax payments.
And they will be stuck with those payments.
Can't say that I blame them..small business is in no better shape then the middle class.
Hired as a subcontractor / contract labor, when you're clearly employed???
You as the worker, hold all the liability, without much control of the situation. Hey, no taxes and all that other crap withheld from your check. You get a much bigger check. But you have to pay taxes on your 1099's & deposits minus the paper trails for overhead expenses.
The business, has less overhead, rules and regulations, that are associated with an employee on the books, that adds to the bottom line. Nor do they have a fear of union organization.
If you had a choice and your employer is doing like a lot of employers and turning all their workforce into "contract labor" would you like it or hate it?
That is pretty much an "Underground Economy", which we have had for a long time and it is growing. Even with 1099s, the enforcement of collecting the taxes is difficult, even when caught, what can be retrieved? I have worked in that environment in the past, and the temptation to ignore the taxes is very hard to resist.
If you had a choice and your employer is doing like a lot of employers and turning all their workforce into "contract labor" would you like it or hate it?
My husband worked as an independent contractor for many years until a buy out from a company that demanded all be employees.
Sure, there was more paperwork at tax time but it worked out well for us.
There are very specific rules dictating who can and cannot be considered an employee. There are many many types of businesses for whom it won't work.
For my company, this is how we do it and have for a few years already. the only people that receive salary is the partners, anyone else who does work for us are 1099'd.
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