Understanding the basics of 1099 contractors can be a daunting task. In this two part blog series, we briefly introduce the basics for understanding the concepts associated with 1099 contractors. Today, we will delve into the topic by answering basic questions pertaining to contractors, compensation and taxes.
What is it? A 1099 contractor is a specific type of worker that independently contracts his or her services to a business. 1099 contractors are often referred to as freelance employees and are used across multiple work sectors. The term ‘1099’ refers to the IRS form that a contractor will receive in regards to their rate of income during a specific tax/ fiscal year.
Compensation? A 1099 employee’s or independent contractor’s compensation is not based upon the typical hourly or minimum wage laws. Compensation is based upon the completion of pre-contracted tasks rather than the total hours of work performed. Independent contractors may receive wages below the minimum wage while other skilled contractors use their expertise to receive wages far beyond the minimum.
Taxes? As you can imagine, 1099 contractors who make a specific amount of income per year are issued 1099 tax forms from the business that contracted and compensated them. While both 1099 and regular employees have tax obligations regarding income and social security payments, regular employees do not have to make their own payments, as their withholdings are taken directly from regular paychecks. 1099 contractors are required to make their own tax payments in full.
This basic information will surely give any hiring manager or business owner an idea of what it means to hire a 1099 independent contractor. Be sure to check back next week for part two as we uncover the risks associated with hiring 1099 contractors.
About Josephine’s Professional Staffing
Founded in 1988, Josephine’s Professional Staffing has nearly 25 years of business success and is continuously committed to providing superior quality staffing solutions to companies in the Bay Area. We proactively and consistently search for avenues to provide staffing solutions in the field of administrative, accounting, healthcare, light industrial, technical and professional services while taking pride in each of our employees. Josephine’s Professional Staffing is a Certified Small Business Enterprise (SBE), Underutilized Disadvantaged Business Enterprise (UDBE), and Minority Woman-Owned Business Enterprise (MWOBE). We can be reached at firstname.lastname@example.org or 408.943.0111 and are located at 2158 Ringwood Avenue, San Jose, CA 95131
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