W2 or Corp-to-corp

Tiras25
Tiras25 used Ask the Experts™
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Hey guys,

The employer asking what do I prefer - W2 or Corp2corp.  I assume Corp2corp same as 1099?
So can anyone tell me the quick pros and cons and what should I choose?
I am single no family, if that's matter. Own a property.. Please advise.
 
Thanks in advance!!
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JohnBusiness Consultant (Owner)
Most Valuable Expert 2012
Expert of the Year 2018

Commented:
I assume you are talking about working as an employee or working as a self-employed business. Depending on tax laws and employment laws where you live, there may be other factors in this choice (the need to have multiple employers (clients), the need to provide your own equipment (PC, phone), the need to set or negotiate your own hours and so on). Where I am, working for one employer only makes you an employee by definition (tax law, employment law, insurance law). These are the factors you need to consider.
... Thinkpads_User
If they pay you the same amout either way, go W2.  This will require them to pay payroll taxes and will allow you to claim unemployment benefits from the state in their name (I assume you live in the US).

Author

Commented:
Yes, I am in US.  Thank you for the tip!
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JohnBusiness Consultant (Owner)
Most Valuable Expert 2012
Expert of the Year 2018

Commented:
If you have one employer, going W2 will save substantial complexity (I am an incorporated business, and it is much more complex). ... Thinkpads_User

Author

Commented:
I see.  In this case its just myself.  
>Corp2corp same as 1099?

Not exactly. They will likely require you to form a corporation, which will cost you about $500 and will add to your accountant expenses when you file taxes. However, it would allow you to take work expenses against your income to reduce your income.
JohnBusiness Consultant (Owner)
Most Valuable Expert 2012
Expert of the Year 2018

Commented:
True, and that is what I was pointing in my first post and later about the complexity.
... Thinkpads_User

Author

Commented:
So with 1099 I can also deduct my work expenses (mileage, gas, office upgrades, etc etc.)  Now it got me curious the difference between corp2corp and 1099.
JohnBusiness Consultant (Owner)
Most Valuable Expert 2012
Expert of the Year 2018
Commented:
The language where I am is Employee (same as you); Sole Proprieter (1009 I think for you); and Corporation (corp2corp) for you. The differences between Sole Proprieter and Corporation are more Legal than Tax (business deductions work the same as you have observed). Corporations provide a shelter than Sole Proprietership does not.

I think, given your description, you would be better served as an employee (since you appear to have only one employer). ... Thinkpads_User
>Corporations provide a shelter than Sole Proprietership does not.

Basically correct. The other difference is the type of corporation. There are two type S and C. C corporations are the normal type of corporations you see araound you. S Corporations do not pay any federal income taxes. Instead, the corporation's income or losses are divided among and passed through to its shareholders.  In your case all of the S corporation income and expensse would go on your Income Tax return.

You should really talk to an accountant for what is best for you. If this is job is for more than 1 year. I would go with an S corporation. if you are not sure, or it may be less than a year than go W2. If you really know what you are doing, and the agency lets you go straight 1099 as a Sole Proprieter.

Author

Commented:
Thanks guys!!
JohnBusiness Consultant (Owner)
Most Valuable Expert 2012
Expert of the Year 2018

Commented:
Thank you, and good luck. ... Thinkpads_User

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