I have been offered an opportunity, i have been told that i would be an independent contractor...my question is this who is responsible for filing W-9. Me as the independent contractor? thank you!

Yes, you would be responsible for taking out your own Fed, State and other deductions from your income. At the end of the year instead of receiving a W2 form from an "employer" you would receive a 1099-MISC form (looks like a W2 but only says how much the company has paid you for services). That would be your 'income' for the year, and from that you are expected to pay income taxes on.

You have a few options for yourself on this. You could just file the income completely on your SSN and pay taxes on all of the income, or you could register yourself as a LLC through the Business Bureau and claim only a portion of that as income and the rest as what your business made.

Best bet, talk to a tax professional (not H and R Block imo).

LIG is right, you need a professional.  You are responsible, and in a lot of cases you need to pay quarterly up front by estimating how much you are going to make.  Talk to a pro.

Another thing to keep in mind, you would also be responsible for your own insurance in the event you received an injury while 'working'. As long as you are working for yourself as your own employer and have no other employees you can get just a basic liability insurance for yourself. If though the work you are doing could cause 'damage' accidentally to something you would be responsible for repair or replacement of damaged goods or property. You would need a separate liability insurance to cover what ever situations may happen.

In essence, by taking on this opportunity you are becoming the owner of a business.

Welcome to the world of being an entrepreneur.

It might depend on what kind of company offered you the position. Is it a club or defense contractor or somewhere in between?

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Just so you are aware as i have to send out estimated payments it is quarterly but it is not always 90 days apart. The first payment is due on April 15th as are any taxes due from the year before,the second is due June 15th. (Which means you do have to set extra aside for those 2 payments,if they are late the government will add penalties) The other 2 are not so bad as there is a bit more time between them as the third is due Sept 15 and then the last is due on Jan the following year. Also another thing to be aware of is that they want the total to be no more then $500 under the total tax due otherwise there is a penalty for that also.(It use to be $1,000 but they changed that in the last year or so) If your state also has an income tax they also may require estimated payments. (As i do live in WI i know that your payments would have to be within $200 or they have a penalty also your state may be different) And they also are due on the same dates.

Also you need to be aware that Social Security is figured with out exemptions and depending how the company pays you may be responsible for the whole thing.

I have done the "Independent Contrator" routine off and on, oddly enough, for a defense contractor. Unless it is huge money, avoid this like the plague. After taxes you will be taking home about 40% of your money, and you still won't ever be eligible for unemployment or health insurance. Plus, you have to pay for the tax help, etc, etc.  This is a bad option as a full time job, it might work as a part time business, but I'm sure you are looking at this as your main source of income? I'm not trying to bum you out, but please be careful and know what you're getting into. Hugs, Tracey

Quote from: Tracey on March 30, 2011, 06:05:56 PM
I have done the "Independent Contrator" routine off and on, oddly enough, for a defense contractor.

Same here, which is why I asked. When they paid me as an "independent contractor," nobody ever mentioned dealing with quarterly payments. They  sent me a 1099 at the end of the year and I just included it with my W-2's when I filed.