What are the Pros and cons in 1099 forms!?

Answer 1

It sounds like you are asking whether it's better to work as an independent contractor (1099) or employee (W-2). If that's the case, the pro is that as an independent contractor you can write off expenses related to earning the money, like mileage, telephone, advertising, supplies, and so forth.

The con is that you'll pay 15.3% self employment tax on your income (after busienss expenses). It will be due in April when you file your tax return. As an employee, you only pay 7.65% in social security taxes, the employer pays the other half-- and it's taken out of each check so it's a lot less painful.

Also, as an independent contractor you are not eligible for unemployment if they let you go, and usually not state disability benefits either (depending on your state). You are also not protected by labor laws-- for example if you work more than 4 hours a week they're not required to pay you time and a half.

That said, I've been in business for myself for over 20 years. I like being responsible only to me. Of course the work has to get done if I want to get paid, and done well if I want to keep clients and get referrals, but I get to decide how much I work and who I work for.

Answer 2

The pros are they protect both parties if an IRS audit is involved. You are protected because if you are the payee you can deduct the amount on the 1099 as a legitimate business expense. The reciever is protected because he knows the exact amount of funds you reported to the IRS so taxes can be filed accordingly. The con is the IRS knows exactly how much money changed hands. All income over $600 dollars made payable to an individual should have a 1099 send.

Answer 3

Not sure what you are really asking. 1099s are used to report income that comes from other than salaried or wage employment, for example, you are an independent contractor or free lance person who pays his own taxes (incl. SS) on what he/she earns. A W2 is for wage or salaried employees where taxes and SS are withheld from the paycheck. You also get 1099s for things like investment earnings, etc. So I don't know what pros or cons are involved, just the different situations that require a 1099 vs. a W2.

Answer 4

Are you asking whether you should work as an independent contractor paid by 1099 or incorporate? It depends on the type of work you plan to do. As an independent you can write off virtually all of your business expenses. You should incorporate to protect your personal assets in case your business has problems with the law, taxes, civil judgements, etc. For most normal people, however, having a sole proprietorship without being fully incorporated is good enough.

Answer 5

1. A good cross-check for your records.

2. But a filing nightmare for businesses.

Answer 6

i have no clue sorry.