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Subject:  Re: 1099 or W-2 employee? Date:  3/13/2003  4:12 PM
Author:  Benevolent Number:  28622 of 49686

You got some good advice about taxes:

Regardless of the mixed signals you got from the company, it sounds like you're a 1099 employee. Without a W-4, you are not a W-2 employee, because the company has no way to know what to take out of your check.

There's nothing wrong with 1099 employment, as long as you're aware of your responsibilities. Yes, you'll probably have to file taxes quarterly. It's not a difficult task, though it may sound that way now. But don't be put off by people who say the deal doesn't sound good. Or, alternatively, you could estimate what you'll make in the free-lance work and have extra withholding taken out of your main paycheck. I used to do this.

As is the case with most sales jobs, the deal is probably good if you're good at the selling, and it's lousy if you're not. If you're on straight commission with no base pay, you'd better be pretty good.

One advantage of 1099 employment is that you can deduct your expenses, even if they're small. Expenses are deducted from your income on the Schedule C even if they aren't as much as your standard deduction, and you can still take your standard deduction.

My advice: If you take the job, don't waste a lot of time "easing in." Jump right into the work and put in several full nights on the phones. It won't take you long to learn whether 1) you like the job, 2) you have a talent for the job, and 3) whether the amount of money you'll make is worth the time you spend on it. When you consider the value of your time, don't forget that you'll have to document your expenses for taxes and allocate some extra time for doing your taxes. Again, it's not that difficult, but still deserves consideration.

If you aren't good at the telesales, or the people are reluctant to talk, or you don't take rejection well, or the commissions wind up being $20 for four hours' work, stop doing it.

That's another benefit of subcontracting like this. If you don't want the job, you're not obligated to anyone.


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