Anyone have any advice on working 1099 in MA?

Submitted by nottoodrunk t3_118c73e in massachusetts

Really considering making the switch to 1099. I’ve briefly talked it over with a former coworker that’s been running his own consulting thing for a while. The money would be significantly more than what I make now (at least a 75% bump on a full year worked), but the other bits that come with it like having to file taxes every quarter, getting and paying for my own insurance / retirement vs company provided, and the more volatile nature of being a consultant or contractor are giving me some reservations. I don’t have kids or any other dependents for what it’s worth. Has anyone made the jump and loved it or regretted it? Industry is pharma / biotech.

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modernhomeowner t1_j9ga7c2 wrote

Can't say I've made the jump, but I've been 1099 for 20 years; I haven't worked a full-time W2. The extra Social Security and Medicare Taxes kind of suck. I'd recommend doing your own taxes; it helps you learn the tax system to make sure you are taking advantage of any credits and deductions available. I'd also recommend when it comes to health insurance, pick one of the HSA-eligible plans and deposit the maximum allowable into your HSA account. An SEP retirement plan allows you to put up to 25% of your income (max $66k), which is a nice benefit. Honestly, let me know if you have questions in the future, I'd be available.

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nattarbox t1_j9g9uol wrote

My partner and I have both been self-employed for a bit, I do love it and will have a hard time going back to a regular job.. Flexibility for travel/vacation offset the annoying parts.

Here's a few tips that helped me:

  • Setup a bank specifically for receiving your invoice payments, separate from your personal bank. Every time you get paid, split the money you need for taxes out to the savings account. Pay yourself on a regular paycheck cadence from the remainder. That way your personal budgeting isn't messed up by irregular payments, and you always have your quarterly payments saved up.
  • Get a good tax person, someone friendly who won't mind emailing/chatting informally. Avoid a big corporate accounting place.
  • Insurance is expensive as hell, but also tax advantaged. Ends up being not so bad once you get over the sticker shock.
  • One thing that sucks is not getting paid when you're on vacation. I work around this by planning out my hours in advance for the month, so if I have some planned time off I can still get a view for the monthly income, where to make up those hours, etc.
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nottoodrunk OP t1_j9gghh7 wrote

This is exactly the type of insight I was looking for, thank you so much! My tax person is currently a family friend, I’ve been working with him since I graduated college so I feel like I’m a good spot there already. If you don’t mind me asking, how much did your health insurance cost increase by percentage wise?

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nattarbox t1_j9gjmcv wrote

I'd guess about 4x increase on insurance. ~$300 for my contribution to an employer plan, vs. about $1200 now, plus whatever dental costs. Also on a mid-tier plan, vs the premium one offered by the employer. That's for two people.

But again, insurance is 100% deductible, and so are most of your out-of-pocket medical/dental expenses, so ends up being not so bad. Still sucks to write the check.

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Linux-Is-Best t1_j9gcojp wrote

Opinion:

This is some sound advice, OP. As someone who has owned their own business in the past, I believe u/nattarbox has covered the basic.

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individual_328 t1_j9hidq9 wrote

There are pros and cons but when all's said and done you probably won't make significantly more money than before. You may very well end up making less. Obviously the biggest pro is freedom to work the jobs you want, on your own schedule, and for many (including myself), that's worth what effectively amounts to a pay cut.

The cons are no paid time off, not eligible for unemployment, no employer-subsidized health insurance, no dental insurance, no employer matching 401k or other retirement program, more taxes, more paperwork, etc. Also, the sheer responsibility of it all can be exhausting. You know those days where you're just not feeling it so you slack off and read Reddit instead of working? Well, when you're self-employed you no longer get paid to do that.

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TheToneKing t1_j9jaxwr wrote

Having control of my own schedule and not having to answer to anyone else has been the biggest benefit for me. I have grown my business every year and always budgeted to be able to pay all bills and taxes. Now in my 27th year and still going strong. Never been a slacker or have taken days off that weren’t planned or deserved. Working for yourself is a different mentality than working a job for some company.

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Stoneberger t1_j9jgw1x wrote

Save 30% for taxes as you will owe 100% of SS, Medicare and other federal taxes

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