I’ve been a contractor for over a decade now. At $150 an hour I just have the check made out to my company. I then pay myself a management salary out of the year’s total and depending on the project set 401k funding matching rules for my employee….me. I match myself from the inside and outside of the corporation essentially. I then pay less than the corporate tax rate and pay myself less than the cash equivalent of the poverty rate so that I have very little taxable “income”.
I do pick up teaching assignments in piecemeal or sometimes work another short-term position that is more traditional in employee-employer scope mainly to meet school and work and fellowship guidelines. Everyone should have both a Tax ID number and an LLC or C Corp in their back pocket for when the inevitable happens and a company wants to deal with you as another company, not as the weakest entity, the most exploited entity, a tax paying citizen.
I work hard to funnel all my work through the concept of being a business, Kyle, Inc.. Even when I’ve worked in corporate America I thought of myself as Kyle, Inc.. We’re doing business, friendly business but business all the same. I treat them as a vendor, nothing more nothing less because they will treat me, a singular entity in person as an employee but on paper as a fellow company.
Employees and straight contractors are treated the worse even if the dollar amount is high, by both the employer and the government/IRS.
It requires a growth mindset to put the breaks on everything and think of yourself differently than the majority of the population.
I did a 9-month project with Phoenix House, Columbia offered to bring their students and incorporate them into my classes. The students never showed up. Phoenix House then asked could I find 10 hours in my schedule to come downtown and they’d pay me to teach the same courses. The Director chased me down one week, after a month in and said that we had a sticky situation. By the letter of the grant, I was being paid by I couldn’t be a de facto employee. She would explain it to me, but I had to be a vendor, a corporation. She would help me set it up. I explained I had already done so when I filled out the paperwork and the checks came to me fine as a company…thanks.
I’ve had a Tax ID number since I was 14 and a corporation since 16.
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