I want to share this with people out there who are new to the field and making their living here in LA. It has to do with being a contractor vs. employee and things you should know. Feel free to add/correct, comment as necessary. Wishing you all good luck.
independent contractor notes:
file as a business with city of la before February 1st of each year. if you do not you will have to pay tax on your earnings.
use your real name for the business name. if you don’t you need to register as a fictitious business, a hassle and you’ll have to pay a fee.
when you file as a business with city of la report your income.
city of la does not tax businesses that make under $100,000 per year. but you need to file before Feb. 1st of each year otherwise you will be taxed.
you can do all of this through the office of finance.
what you will be responsible for in terms of taxes:
state, federal, plus self-employment.
self employment is an additional 15.3% on top of state and federal. you can deduct half of it, but you should keep that in mind and save accordingly.
independent contractor vs. employee:
the IRS, state of california, and city of la clearly define what an independent contractor and an employee is. you can look this up on their respective websites.
you should know the difference between the two and protect yourself accordingly.
if an employer wants you to do a “3 week trial period” as an independent contractor for example, you should hold them accountable to that 3 week trial. after the 3 weeks ask firmly to be “put on payroll.” if you wish to remain an independent contractor, be sure you continue saving to pay your taxes.
to be an employee you need to complete the W-4 form (employer withholdings).
if you are being hired as an independent contractor you should negotiate for a higher rate than what an employee would be paid. the purpose of this is that you will have to pay your own taxes and need the extra income.
if you are an independent contractor, you are technically a small business. anything you spend on your business you can deduct from your overall income. for example, if you need to buy a computer to do work for the company that has contracted you, that is a deduction.
Jan 27, 16 7:58 pm
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Independent Contractors vs. Employee in Los Angeles
Hey everybody,
I want to share this with people out there who are new to the field and making their living here in LA. It has to do with being a contractor vs. employee and things you should know. Feel free to add/correct, comment as necessary. Wishing you all good luck.
independent contractor notes:
file as a business with city of la before February 1st of each year. if you do not you will have to pay tax on your earnings.
use your real name for the business name. if you don’t you need to register as a fictitious business, a hassle and you’ll have to pay a fee.
when you file as a business with city of la report your income.
city of la does not tax businesses that make under $100,000 per year. but you need to file before Feb. 1st of each year otherwise you will be taxed.
you can do all of this through the office of finance.
what you will be responsible for in terms of taxes:
state, federal, plus self-employment.
self employment is an additional 15.3% on top of state and federal. you can deduct half of it, but you should keep that in mind and save accordingly.
independent contractor vs. employee:
the IRS, state of california, and city of la clearly define what an independent contractor and an employee is. you can look this up on their respective websites.
you should know the difference between the two and protect yourself accordingly.
if an employer wants you to do a “3 week trial period” as an independent contractor for example, you should hold them accountable to that 3 week trial. after the 3 weeks ask firmly to be “put on payroll.” if you wish to remain an independent contractor, be sure you continue saving to pay your taxes.
to be an employee you need to complete the W-4 form (employer withholdings).
if you are being hired as an independent contractor you should negotiate for a higher rate than what an employee would be paid. the purpose of this is that you will have to pay your own taxes and need the extra income.
if you are an independent contractor, you are technically a small business. anything you spend on your business you can deduct from your overall income. for example, if you need to buy a computer to do work for the company that has contracted you, that is a deduction.
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