1099 or Open my own corporation?

Depends on what your home state of record says about it, all are different and best to consult with someone local.

 

Easy, don't deal with companies who treat drivers like robots. Don't work for companies that consider you a "contract employee". As a new driver, you shouldn't be working for these trashy companies, anyway. It's ok to be a regular employee, eligible for benefits and rights as an employee in America.

 

1099 or your own corporation? The answer's easy. Neither. Get a job with a legit company that will pay you on a W2. With rare exceptions, the only situation that you should consider working under a 1099 is when you're bringing your own truck to the party. If you're driving their truck to pull their loads on the their schedule, then you're an employee NOT an independent contractor. Lots of shady outfits hire employes as independent contractors because its cheaper for them (and more expensive for you). They get away with it because they can only get busted if an employee turns them in which rarely happens for some reason. If a company wants to hire you as employee but pay you as an independent contractor, they are violating federal tax code. Don't work for a company that breaks the law. Just don't.

 

I would open my own LLC if I were doing contract work with my own equipment, however if you don't own the equipment, I could hardly see how you are a independent contractor, and thus should avoid anything with 1099 on it.

I have done 1099 work before, and it was always a set deal, I do this, for x amount of time and x amount of dollars. If you are hauling multiple loads for a company using thier equipment for an indefinite time period you are an employee for sure.

 

Who is putting this 1099 stuff in your head? If you don't own the truck, whoever they are has to withhold taxes,etc. Don't get scammed!

 

Fed Ex contractors pay 1099, I think they are legit.

What you have to do is take into consideration what a 1099 is. If you are receiving a 1099 you are required to pay your taxes 4 times a year. This will include all Social Security and Medicare taxes. Because the company 1099's you they are saving on accounting cost. You have to remember that Social Security Taxes are 15%. The employer pays 7.5 and you pay 7.5 in the standard employee relationship. 1099 you pay it all yourself. So, if you are making 1000 a week, you cost the company 1075. 1099 saves them 75 dollars. You will have to pay that yourself. So you are only making 925. I have enough income from outside sources that I pay my takes quarterly whether or not a company is withhold my taxes for me. It is the belief of lots of conservatives that if you had to write the check for your taxes 4 times a year, you would be much more likely to want tax cuts.

The Corporation question should not be effected at all by 1099. It is a different matter all together. If you do not own your tractor then there is no reason to set up a corporation. The corporation is a way to protect your personal assets from your trucking assets. I am incorporated many different ways. None in my truck driving. I am insured in my truck driving. They can sue me but only for something I do wrong. Chances of that is very unlikely. I carry a $5,000,000 umbrella policy so I would have to do over $6,000,000 in damage before they come after my personal assets. They would go after the company before that.

To recap (and not the tires) 1099 has nothing to do with the value of the company. It is how they do their taxes. A corporation protects the owner of the tractor.

 

Are they still doing this? I know there have been class action suits against them for doing this and I thought they lost those suits. At any rate, I believe my post contained the words 'with rare exception'. I included those words for a reason.

Absolutely not true. You have the option of paying taxes quarterly, but it is not required.

 

If you are a 1099 and have re-portable income and do not file you will receive a penalty.

 

I would have to argue that I am not sure if you have to pay quarterly or not. I know I file quarterly.

Withholding taxes is something the IRS or Congress came up with because people tend to spend all the money they bring home. Saving money to send the government taxes is not something people enjoy.

The point I am trying to make is this. Let's say you are working for a company and they offer you 40 cents a mile. They tell you that you are being 1099ed. 40 cents a mile is all you are making. Another company tells you they are paying you 40 cents a mile but it is as an employee. You will get a W2. The second company is actually paying you more. It is paying you 40 cents a mile plus 7.5 percent of you wages as Social Security plus what ever percent Medicare you fall into. Another company could be paying you 40 cents a mile plus benefits. You have to add all of it together to figure out who is giving you the best deal.

Remember, no matter what you think, you are self employed. That is unless you work for a union. Unions allow you to join together so that you have more power when you sit down and discuss wages. You as an individual have the same right. The company may offer you 40 cents a mile but you can ask for more money. There is a company in Dallas that makes a big deal out of giving you New York City pay. They pay $150 for anytime you have to go into New York City. Then they tell you that crossing the George Washington Bridge is not going into New York City. About 1/3 of the company drivers get paid for going across the GW Bridge. They get paid because they argue the point and won't cross the bridge without getting paid. All employment is at will. If you don't like the pay, ask for more money. We earn every dime out here. It is not the same as someone giving you an allowance.

I get paid every week. I am in the top end of the tax bracket and I live in a state with a state income tax. Therefore almost half of my income goes to pay taxes. I put checks from week 1 and week 3 every money into an interest baring savings account. (1.2 %) On the 15 of the quarter, I send a check to the state and to the IRS. Had I been working for a company that withholds the money, the Government would have had the use of my money for free. I don't trust the Government. I am not counting on Social Security. I do not believe that the Government can pay for my health care at a better rate then I can myself. Other then exploration, I see no reason to give any money to the government.

You can be 1099ed and still have benifits also. You just have to get them to agree.