[nabentre] Contractors Versus Employees?

Mon Nov 30 21:41:41 UTC 2015

Going back to the prior thread that touched on this question:
I agree with Colleen--that Brandon's treatment of life as an employee
vs. life as a contractor was clear and for the most part accurate.  As
someone who has worked both as an employee and as a contractor, and
who does financial planning professionally, I wish to clarify one
point and to make a couple of others.

(1)  As an employee, you work for someone else in exchange for a
documented wage or salary.  Regardless of whether you are an exempt
[salary-earning] employee or a non-exempt [hourly wage-earning]
employee, you receive at the end of the year a Form W-2 Wage and Tax
Statement, a model for which is available for download on the IRS'
Website.  An employer withholds federal taxes in accordance with what
you have filled out on an IRS Form W-4, and the employer also deducts
from your wages, among other things, a portion of your pay that is set
aside for payment of one-half of what is owed on your behalf to the
Social Security and Medicare systems.  As a contractor, on the other
hand, you receive at the end of the year a Form 1099-MISC.  You as the
self-employed owner of your services must go through a more
complicated scenario to figure out how much tax you owe, and you also
are responsible for paying more into Social Security and Medicare than
you would have as an employee of somebody else, because when you are a
contractor you must pay into these federal entitlement systems from
both the employer side and the employee side.  If you are a
contractor, if you're thinking of becoming one, it's a good idea to
familiarize yourself with these self-employment tax rules, which you
can do by reading
https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employment-Tax-Social-Security-and-Medicare-Taxes.
I have found overall that the IRS' and the Social Security
Administration's Websites are very accessible to a blind reder.

(2)  The biggest economic difference these days between a full-time
employee and a contractor often comes down to health insurance: where
it comes from, who is responsible for paying for it, and how much you
as an employee or contractor is responsible for paying on this
benefit.  In the United States, the trend for many companies is to cut
down sharply on their number of employees and to get services
performed more and more frequently by self-employed contractors.  In
this way, they pass along the full responsibility and cost for health
insurance coverage--or for paying the penalty if you don't have any
health coverage--onto the worker.  This is a whole different topic of
discussion which I don't want to get into on this thread; but it is
extremely important for any of us who have families.  And it's not
just an either/or proposition.  Sometimes, employers do not pick up
health insurance for employees; other times it is worthwhile even if
you are an employee to look for your own individual coverage and to
reject participation in a group plan that the employer offers.  At any
rate, it's important to go to someone who knows what he or she is
doing in this area for advice.

(3)  Finally, if you are someone's employee, you have some civil
rights protections guaranteed by the Americans with Disabilities Act.
If you are a contractor who hires others, and if you earn a certain
amount of your business from selling products or services to the U.S.
federal government, then those whom you hire have some ADA protection
as well.  http://www.dol.gov/dol/topic/disability/employeerights.htm
But if you work as an independent contractor for somebody else--say,
as the seller of nutraceuticals on behalf of an MLM or even as the
independent representative of a broker/dealer in the securities
business, as I do--you have almost no protection under the Americans
with Disabilities Act.  This is because the world looks at you as
being a self-employed person who can choose who you want to represent,
or who can choose not to represent anybody at all.  I am not an
attorney, but from what I have read our protection as
contractors--such as we have any--comes from certain provisions of the
Rehabilitation Act of 1973, particularly Section 504.  I'm sure a duly
licensed attorney who follows this list can clarify my own
understanding of this; but when making a choice about how you want to
interact with another company as you create a job or career for
yourself, it's worth taking these things into close consideration
first.

Warm regards,

Kane Brolin

On 11/30/15, Anita Ogletree via nabentre <nabentre at nfbnet.org> wrote:
> Hello Everitt.
> Thank you for the information.
>
> On Sun, Nov 29, 2015 at 1:47 PM Everett Gavel via nabentre <
> nabentre at nfbnet.org> wrote:
>
>> Hello Anita,
>>
>> Below are 3 good links to pages where you can find
>> out more on what you ask about, with the
>> differences between Being or hiring a Contractor
>> versus an Employee. To sum it up, though, a
>> Contractor is someone who is in business for
>> themselves, and the company that hires you, with
>> you being the contractor, pays your business to do
>> some work for or with them.
>>
>> Consultants are contractors, for instance. Those
>> often-ex-military people who hire on to go back to
>> the Middle East to work with our government in
>> various ways in the middle of wars, they are
>> Contractors. They've started their own businesses
>> after getting out of the military, quite often,
>> and then stay in the game by becoming consultants,
>> i.e., Contractors working for themselves, being
>> paid by the government to help out over there.
>> Since they're so familiar with the situation
>> already.
>>
>> As another example, I'm going to be hiring some
>> local contractors in our region to do some
>> sourcing for us starting in 2016. I don't want to
>> deal with hiring employees just yet (if ever). So
>> I'll be hiring contractors to get done what we
>> want them to get done, and they can keep up with
>> our quotas, on their own schedules, pretty much,
>> week by week. That's one of the biggest
>> differences between hiring a contractor versus an
>> employee. You as the hiring entity, have more
>> control over how you want things done, with an
>> employee.
>>
>> Here are the 3 sites/pages with full details and
>> differences, from the IRS, SBA, and FindLaw...
>>
>>
>> IRS -- Independent Contractor (Self-Employed) or
>> Employee?
>>
>> www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-Self-Employed-or-Employee
>> Aug 5, 2015 ... I am an independent contractor or
>> in business for myself ... must first know the
>> business relationship that exists between you and
>> the person performing ... Know
>> Who You're Hiring - Independent Contractor
>> (Self-employed) vs.
>>
>>
>> Hire a Contractor or an Employee? | The US Small
>> Business - SBA.gov
>> www.sba.gov/content/hire-contractor-or-employee
>> Independent contractors and employees are not the
>> same, and it's important to
>> understand the difference. Knowing this
>> distinction will help you determine what ...
>>
>>
>> Being an Independent Contractor vs. Employee -
>> FindLaw
>>
>> http://employment.findlaw.com/hiring-process/being-an-independent-contractor-vs-employee.html
>> Maybe you've never thought about the difference
>> between being an employee
>> and being an independent contractor (also called a
>> consultant). In many respects
>>
>>
>>
>> Strive On!
>> Everett
>>
>>
>> ----- original message -----
>> Good evening and I hope everyone had a great
>> Thanksgiving.
>> It has been a while since I've commented or asked
>> questions on this list.
>> If there's anyone whois willing to answer this
>> question it would be most
>> helpful.
>> When you talk about being a contractor or doing
>> contract work for
>> companies, what exactly does that mean. I am
>> trying to research some
>> business ventures in hopes of starting a business
>> and I came across this
>> email.
>> Thank you in advance for your help.
>>
>>
>>
>>
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