Is there a comprehensive FAQ for being a 1099 Independent Contractor?

Almost wonder if I should post this in the Expediter forum since it seems to apply a lot there, but maybe some good advice on this could be given to beginners. I think it would be a shame if people are intimidated from entering certain jobs just because of the 1099 Taxes and Withholding.

For some reason, a lot of interesting driving jobs are setup in a way that requires people to work as a 1099 instead of as a more basic W2. Possibly the main reason is to avoid withholding or benefits.

So.... I find a job I think is interesting which is driving and delivering vehicles like Trucks or Buses to customers who bought them. Then I have friends or family that say I'll be screwed, or I'm doing it wrong, or I need to form a LLC company, or that what I'm doing is even illegal. I ask on different forums or on Google and feel like I'm not getting a straight answer.

I do have an appointment with an accountant in town who says they're familiar with trucking taxes, so hopefully that will clear a lot of things up, but I thought some input from people here could shed some light on this to.

 

1099 is shady as hell at best.

More interesting than delivering trucks and buses on a 1099 is doing it as a W2'd employee. Just my .02

 

you will (or should) pay taxes quarterly, this is what A real accountant sets up for you. if you find yourself over-paying into your taxes, you get nothing back, but a credit towards your next installment. this IS what happened to me.

at first, i liked being a 1099 person, but after a short time, i found that it was not a good deal for me. if i were to be retired, then maybe, i say maybe i'd do the 1099 crap, this way, i can only earn so much, and not mess with my SS collecting.

but for a young person, one will need stability on the job market, should the 1099 go belly up, as you may not have any proof of a job. oh sure, you can show your 1099 pay stubs, but in all reality, they maybe under a name not recognized as a transportation job, what will you do then.>??

 

Because most of the Driveaway companies hire CDL holders who drive CMV's they do have DOT numbers and report to hireright/DAC. So don't fear not having proof of job. However a lot of these companies screw over the drivers. I don't recommend you drive for any company as a contract/1099 driver. I am sure others will disagree however this is my opinion based on many drivers I know that have been screwed over.

 

1099 isn't as bad as many make it out as.

The problem is that there is an abuse of the contractor form of employment and this is where the 1099 seems to be an indication of everyone being screwed.

In order for it to work, you have to put money aside for taxes and if done right, your SS contributions will be there for retirement. However there is an issue the employer contribution to SS which you pay into.

The advantage is limited, but the freedom seems to be good for many who seek out the ability to control their work.

By the way I've been a 1099 on and off for years, and my drivers are contractual 1099 workers because they have freedom to select their work without my telling them what to do. They are happy so it works for us.

 

My only issue with being a contract/1099 driver is the 14% FICA. Regular employees only pay 7% that is matched by employer. In the case of a contract/1099 driver YOU pay that matching 7% on top of the other 7%. For a job where you are paid $60,000 that is an extra $4 grand YOU have to pay. 1099 pay in my opinion is just not worth the hassle. Edited I made 2 mistakes with that post. First mistake was the rate is 16.2 % not 14 and it is not called FICA it is called the self employment tax.

 

Taxes aside, you get no benefits like health insurance, paid time off, workmans comp, unemployment insurance, etc. It's not a good deal for the driver.

 

All those things cost $$ to the employer if w2 employees or to the employee if 1099
Paying drivers 1099 potentially puts more $$ in their hands for them to decide how to spend it.

so which way would you rather be paid?

Would you rather work for 700 take home a week and employer takes out taxes and spends money on benefits like health insurance, paid time off, workmans comp, unemployment insurance, etc

or would you rather take home 2000.00 a week and you choose how to spend your $$$

No wrong answer here ... some would rather be w2 and have all those things provided..
others would rather be 1099 with extra cash in hand. Pretty much the same way some people want a hourly/salary job whereas others prefer commission.

 

You're right in that many of the 1099 companies pay more CPM. If it was $700 on W2 vs $2000 on 1099 it would be a no brainer. But what if it's a difference of 7 or even 10 cpm?

 

10cpm difference that is 250 per week @ 2500 miles. For that, I'd rather be w2 with all the benefits (assuming they cover 100% of healthcare etc) but at 20cpm difference, the 1099 becomes more attractive in my opinion

Do most 1099 drivers drive for cpm or a percentage of revenue? The guy who drives my truck I pay percentage of revenue, but I wonder how most others do it?