Independent contractor

[kacaju]

I am looking into getting a very part time job as a dog walker. The company that is hiring is a local company and on their website this is what they say about being paid. What exactly does that mean? I am assuming it means they do not withhold any taxes? If so what does that me for me and dh come tax time?
Thanks for any help, I want to understand this before I meet with them!!

This is the wording on their site.

You’ll be paid as an independent contractor, on a per visit arrangement. A brief training program for all pet providers is required before performing any paid services for (business name here)

 

[akcire]

You will get a 1099. They will not withhold taxes, nor provide any benefits. You will need to keep something back to pay your taxes.

Make certain that you would still be covered under their general liability policy as an employee if there are ever any problems. I would never go into a private home in a service function, without insurance.

 

[aka-mad4themouse]

I worked as an independent contractor for a large company for a couple years. I had an actual contract, was paid a nice hourly wage which was portal-to-portal. I also was reimbursed for all travel expenses and out of pocket expenses that were necessary to conducting the business (faxing, photocopying, etc.)

I was responsible for ALL social security (normally your employer pays half), and I paid my taxes quarterly. I had no retirement plan, health plan or paid days off. The company paid for my personal liability insurance while performing work for them.

If I didn't work, I did not get paid. OTOH, I could take time off whenever I wanted. I could accept or decline a job based on my availability or the location of the work. There were no guaranteed hours and there were some weeks where I was available to work but had no assignments.

Keeping accurate books was necessary to making this work for me. If you cannot be organized with your receipts, it can be a mess come tax time. Having an accountant do the taxes was a plus.

Hope this helps you some. Being an independent contractor is not for everyone.

 

[eeyorethegreat]

Long story and I am not sure I even understand all the reasons behind it but I get paid as an independent contractor (I get a 1099 at the end of the year) as a Preschool/PreK teacher. No taxes taken out no benefits like everyone said and it seems, though I could be wrong, that the tax rate is higher when I do pay my taxes. I'm considering leaving this position at the end of the school year for a multitude of reasons (LOVE the kids it is everything else in the way the program is run that I have issue with) and I am looking forward to my next job not having to deal with the 1099 .

 

[kacaju]

thanks, dh has a great job with benefits. This would be walking a few dogs at lunch time. Perfect for me, I am home anyway so I could work this in with my daily routine.
I am a SAHM so I want to still be here for my kids (15, 13 and 9) so I can even do this on days they are home from school.
Dh normally does our taxes so I just want to be sure I know what I'd be getting into. How do you know how much you would have to set aside to pay the taxes? Can we find that out ahead of time?

 

[Evans Family]

If find that I have to pay 50% - 60% of my income to taxes. I would leave 50% just in case. Of course, a lot has to do with if you have a spouse and what kind of money they make and if you make additional income from another source.

 

[dvcgirl]

I am looking into getting a very part time job as a dog walker. The company that is hiring is a local company and on their website this is what they say about being paid. What exactly does that mean? I am assuming it means they do not withhold any taxes? If so what does that me for me and dh come tax time?
Thanks for any help, I want to understand this before I meet with them!!

This is the wording on their site.

You’ll be paid as an independent contractor, on a per visit arrangement. A brief training program for all pet providers is required before performing any paid services for (business name here)

I own a pet sitting business and this is how most owners in our world hire employees. It's a very fuzzy line between being an IC and an "employee". As a true IC, you really should be able to set your own schedule to a certain degree. This is somewhat limited with mid-day walks for dogs as you need to get them done by a certain time.

Be sure to track your miles as you will be able to write that off on your taxes. And to be on the safe side, you need to set aside 25% of your income in a separate account cover your taxes. That may be too much...may be closer to 20% for you depending on your household income, but 25% is a good place to start.

 

[wdwfan16]

thanks, dh has a great job with benefits. This would be walking a few dogs at lunch time. Perfect for me, I am home anyway so I could work this in with my daily routine.
I am a SAHM so I want to still be here for my kids (15, 13 and 9) so I can even do this on days they are home from school.
Dh normally does our taxes so I just want to be sure I know what I'd be getting into. How do you know how much you would have to set aside to pay the taxes? Can we find that out ahead of time?

Estimate what you will make in a year. Then do an online tax return for 2008 and see how much more you would pay in taxes than you did in 2008. Have your DH up his W4 to cover those taxes ($X/pay period) and you will be over the 90% mark to prevent paying a penalty or setup an account to pay your taxes quarterly. You will need to so your SS/Medicare payments quarterly.

 

[FINFAN]

make sure the employer / owner has you insured and bonded...you will be entering residences, caring for their pet, do not agree unless they will do this. Also , Iwoudl have htem run a background check on you (at their expense if there is one) so it is proof that you have no past issues. Sounds intimidating, but it is to protect you.

 

[kacaju]

http://www.petsitllc.com/
Here is the insurance they use.

 

[Binnie]

Long story and I am not sure I even understand all the reasons behind it but I get paid as an independent contractor (I get a 1099 at the end of the year) as a Preschool/PreK teacher.

I'm an HR-type, and routinely have to deal with the IC/employee question, and this one puzzels me... I cannot imagine a situation in which this would be an OK scenario. (on contract yes, but not paid as an IC.)

The IRS has a "test" (it used to be a 20-step test, but it looks kinder and gentler these days) that they use to determine whether an employee is genuinely an IC, and I can't imagine a preschool teacher qualifying. Here's a link to a page on the irs website about it: http://www.irs.gov/businesses/small/article/0,,id=99921,00.html.

It definately works to a company's advantage to hire people as ICs, as there's no tax liability for them (only for the IC), so lots of organizations will do it to save money. And there's big liability if they get caught misclassifying employees as ICs.

Sorry to hijack a bit, but as another poster mentioned, the line between IC and employee is very fuzzy.

Back to OP... Ask the company about what would happen if you were bitten while working--would the GL insurance cover your injury?

 

[Pakey]

As an independent contractor, you will be responsible for not only your income taxes, but also the employer's portion of FICA and Medicare that are normally paid by an employer. These two taxes are 7.65% for each (employee and employer) so as an independent contractor, you will be 15.3% but you will be able to deduct half as a business expense to reduce your income taxes.

I would definitely ask about liability insurance. Not only for a situation in which you might get hurt, but a situation in which a dog could get hurt. Could the dog owners come back and sue you personally? This would concern me more than anything else.

 

[donald&daisy]

As an idependent contractor if you end up getting sued by a patron, it is you who will be liable and not your "employer." Normally if you are an employee and you get sued the plaintiff will most likely join your employer in the suit under respondeat superior and the employer will be liable for your torts actionsif they are in the scope of employement (i.e. your employer wouldn't be liable if you got into a fist fight unless it was somehow connected to the ordinary course of your business). Basically it means you take on a lot of liability so make sure YOU have comprehensive insurance.

 

[DISdreamin']

DH and I have both worked as 1099 employees at one time or another. We typically found we needed to set aside 40% of our 1099 income for taxes. We may have gotten some small portion of that back at tax time, but it wasn't a whole lot. We're talking perhaps $20K in 1099 income of a total income of perhaps $75K at the time, so that'll help you figure the tax bracket roughly. Thankfully those days of worrying about estimated taxes and covering our own Medicare/etc. are looong gone.

Personally, my biggest concerns would be twofold - first, taxes. Be absolutely sure to do quarterly estimated taxes or be ready to get hammered by the IRS come the following April. Secondly, liability, as others have said. I know my personal liability policy will NOT cover me while I am working, so I am assuming you need a special policy to handle employment time. This would be a big worry for me given that you are going into peoples homes and dealing with their cherished pets. I know when you hire people for home improvement you should be sure they are fully insured or for moving you are supposed to ensure that they are bonded (I think that is the right term) - I'm thinking as an IC you need to be much the same unless, as others have said.