I am currently working as a W2 employee for my prime consulting company. When asked them to increase my pay they said if you come to us in 1099 they can provide me more than what they will be increasing my pay . Now I am confised to what should I do.

1. Should I register single owned LLC? They dont take any tax at the beginning but i think i should pay at the end of the year or quarterly. Is it true?
2. I dont have any benifits provided by my company as W2 , I pay my own insurance, no vacation , i make my own vacation days through comp hours (DBA has lots of comp hours :) )

What do you think is best? Any suggestion or any LLC holder advise would be great help here..

Mikel (Chalauchha Cycle)

No one??
Keeping this thread alive...

Assuming that you have GC, this seems like a straightforward case to me. Do what will help you make the most money (considering you are not getting any benefits/paid vacation time now). How much more will they pay you as a independent contractor (LLC)? Will the difference be significant even after paying taxes (as an independent contractor they won't withheld any taxes, you will have to make quarterly estimated payments; remember you will have to pay both employer and employee portion of FICA taxes). There is no way to answer your question without knowing the dollar amounts of your current and future pay.

Difference will be around $10 .

What about single owned LLC? Is it same as 1099?

Is there any accountant in Sajha that i can take his some time (will pay if necessary) and understand all these c2c,1099,llc and W2 . I have bunch of information from online but their terms does not rings any bell to me. :(

Unless there is significant different between payrate I wouldn't recommend you to go with 1099. W2 is the best bet I can think of. As jiwan_pidit said you have to pay both employer and employee portion of FICA taxes which is itself 7% each additional. Just for $10 diff I do not suggest you to go with 1099. You will lose a lot .

I am not an accountant, so I hopefully, an expert will contact you.

State laws differ so to answer your question correctly, the accountant would need your State. If you work for a company as an employee, they issue you W2.If you work without being an employee, they issue you 1099.

They can pay the 1099 directly to you (independent contractor), pay it to a LLC (you register a LLC) or pay it to you as a sole proprietor. The benefit of a LLC is that will limit your financial exposure (you can google the difference between sole proprietor and LLC).

When a company pays you as an employee, they pay the employer’s portion of FICA taxes (7.65%) and withheld employee’s portion of FICA taxes (7.65%). When you are an independent contractor (or LLC or sole proprietor),the company doesn’t withheld or pay any taxes, you have to pay both the employee’s and employer’s portion of FICA taxes (15.3%)

Let’s say you work for 2080 hours a year. Your current pay is $50 an hour, you gross pay is $104000.

Current Gross ($50/hour) = 104,000

Employer’s FICA portion = 7,956

Effective Gross Pay = 111,956 (given that you will have to pay 7,956 more if you were filing taxes as an independent contractor)

Future Gross ($60/hour) = 124,800

Let’s say accountant filing fees for LLC, registration fees for LLC and the need to carefully track business expenses is worth $5000 to you. Even after that you would make $7,844 more (all other taxes such as employee's portion of FICA, State income tax, Federal income tax will remain same)

Remember: The calculations above are NOT net calculations. You still need to take into account all other taxes (as far as I know, all other taxes will remain same regardless of whether you file as employee or independent contractor or LLC or sole prop.)

Disclaimer: I am not an accountant or an expert, just a novice interested in this stuff. Consultant an actual accountant.

mY god..

You know so many stuffs and you still say u r pidit... ( Brilliant)
Thank you boss... Lot of things makes sense now. I would definately talk to an accountant.
One thing I know for sure is if i ever interested in this business (Consulting ) and I register LLC now might help me. I am still considering for LLC but not sure should i user myself as an employee to begin with or not yet.

I will also post anything that i know so other people might get benifitted. Thank you both.

I would still need more advise and 2cents if anyothers has anything that they can share. :)

Accountant.. Please PM me..

Hello All--

I am also in the same boat. The vendor I am working for stated paying me on 1099 ( I was totally unaware of it). Later I found out that by doing this they would save same money. While it is true that I will get paid the gross amount (i.e., hourly rate*hours work), I think the year-end would be pain in the rear because of all taxes that has to be filled in by me.

I am Texas resident so I will only be paying Federal ( no state taxes) and no ss and medicare. Given that I will only make about $27K (because I know I won't be working these guys for long time). What would I be paying the EOY?

I have already been paid 4 pay checks. It is now feasible for them to switch to w2?

Can I have numerous W2s and 1099s on a single tax year? And if yes how's it going to effect the tax calculations (rate and all )?

Thanks in advance.
Laalom

Think of Tax consiquences?
There will be no federal and state tax withheld, no social security and medicare. 

You will be working as independent contractor: while filing taxes you can deduct expenses as business expenses. you will be paying for selfemployement taxes ( 15.6%) and then your tax liabliliry pay taxes. .
see the link
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employment-Tax-Social-Security-and-Medicare-Taxes

You have to buy your own health insurance and no other benefits at all.

Lalmon: you can have both, it dose not matter but if you do not know how to do your own taxes with 1099 misc income and what can be deducted , it may be another pain in neck.

Working as a employee you kill time and still get paid but as Independent contractor : you have to bill them hourly, and they may incourage to bill only hours you really worked that may squeeze your hours and get lesser and lesser.

@Laalmon – yes, you can have numerous W2s and 1099s on a single tax yea, no problem at all. As for your tax liability for the time they pay (or paid) with 1099s, your FICA taxes will be Amount*15.3%  (all other taxes will remain same). Did you see a 15.3% increase in your pay? (7.65% their share and 7.65% your portion withheld). If you didn’t see a 15.3% increase in your pay, they have lowered your pay.

I do not agree with Jiwan - a 15.3 % or more increase ( May be you did not read others comment well) is an acceptalble.
You have to consider all other monitory or non-monitory factors?
Add the differences in Health insurance you have to pay from your pocket, add the 401K matching by emplyee, paid vacations and holidays, so and so.

@magorkhel - my bad, you're right. I was thinking of mikel's case where he isn't getting any benefits (health insurance, vacation days etc) as an employee. @lalmoon - magorkhel is right.

They have a Health Insurance plan that i will have to pay for it which is preety much similar to what we get outside, no paid off , but i heard if I am working as a sole proprietor of LLC, I may have Tax benift like office rent, office supplies and many and also as a single owner , i do not have to run a paycheck for myself. Not sure if my information is correct. So if you are working as a W2 employee with no benifts , why not work as employee of your own LLC?
I may have chance in future to employee more people and get benefited as a Business but again these are just some thoughts that have been comming into my minds day and night..

Khai kam garera bhanda ni kam garayera matrai paisa kamaine raichha. I need to start from the scratch I know but where do I start. ??

I do pay from my pocket for health insurance. We do not your 100% situation and advising to our best and it is soley your decision.

Do you do your own taxes? If you do still you will not know about how the self emplyee tax filing works.
How much benefit you will be getting? Have you calculated yet? If not , this is how it works.

Lets say you'r an independent cotractor :
You are going to use an office or part of your apt as office? If the second one to save money :
you have to calculate the Usage for office and you can deduct it as expense. If you own a house No tax specialist will advise to deduct your home for office use. At the time of sale the use of office need to dig back to calculate if you were in loss or gain while selling the house, I mean it will be added back. You can not deduct what ever you want _ there should be track and evidence in case you were audited.
If you are trying to establish yourself as independent contractor , have some free time and work on own schedule that is good.
But you will be looking for a job one after another then stick with W_2 , it will be easier on interview ( you may have to explain what happen and why you trying to be a employee ).
We just explained the difference between 1099 and W-2.

We actually did.. Thank you @magorkhe1 for your detail information.
I think i need more homework before I actually make a descision on what I want to do.

Thank you all for the input. I still dont mind having more ideas on how others have done if they have.

Cheers.

Bro haru euta quesiton,

STEM extension ma 1099 ma garna huncha ki hudaina. Mero h1b file bhaisakeko cha receipt pani aako cha. Pachi approval ma kehi problem aaune chance cha ki chaina? Company sano thiyo tyehi bhayer usle september samma 1099 ma garr, october first dekhi malai w2 ma garauchu bhaneko cha. Maile college ma contact garda, huncha bhaneko thiyo ra gare, tara aajkal google garda ali ali discouraging answer haru pani dekhincha, tyehi bhayer ho. Company sano cha, usle gc pani gardinchu bhaneko cha. Company herda potentiality pani cha company ko grow garne, tyehi bhayera job change garda start up bhanera aaihale, ahile chahi darr lagna thaleko cha.

@acid_feak: According to Page 18 of this USCIS document, 1099 employment is allowed while on STEM extension. http://www.ice.gov/doclib/sevis/pdf/opt_policy_guidance_042010.pdf