Are you a 1099 paid Contractor and stressed about paying Taxes? We can help!
Were you paid over $100k as a 1099 Contractor? To pay less in taxes, it’s time to get an S Corp and be on payroll. We can help you with this, too!
Did you know that if you paid a 1099, you are technically a Business Owner and can take business expenses? Don’t miss out saving big bucks!
Let me explain why this is such a problem for 1099 contractors…
It seems more and more people are getting paid as 1099 Contractor instead of as a W2 employee. Why? Because it is less expensive to the Business Owner (They pay less payroll taxes this way).
The problem with this payment method, is that the tax burden now falls on the shoulders of the 1099 employee. Oftentimes, the1099 Contractor has no clue how to stay on top of their taxes and tax debt builds each year. Here are a couple tips to stay on top of your taxes as a 1099 Contractor:
- Make a tax payment to the IRS and GA each quarter. These are called quarterly estimated tax payments. It is actually required by the IRS, but many people don’t know that. The more you make, the more the penalties are for not paying quarterly taxes.
- At the very least, do a quick calculation on Federal/State amount to pay each quarter. For example, if you are expecting to get paid $100k throughout the year and have $20k of business expenses, you should pay quarterly taxes on $80k. Since you are paid $20k each quarter, pay $5k to the IRS each quarter ($20k * 25%), and $1,200 to GA ($20k * 6%) each quarter.
- If you are making over $120k 1099, it’s best to go ahead and start an S Corp and get on payroll. Payroll helps you automatically pay your taxes through the year. It’s wise to pay yourself at least 1/2 of your 1099 profit through payroll. For example, if you had a 1099 of $150k with $30k of business expenses and therefore a $120k profit for the year, it would help tremendously to run a $60k payroll throughout the year to reduce your tax burden and pay less taxes as an S Corp.