April 15 is looming large for many IT professionals, perhaps none more so than IT contractors who will have to file a stack of separate 1099s for the multitude of companies they’ve done business with. This can be a frustrating process, because there’s a lot of work involved with filing that many forms, and more importantly, 1099s are seven times more likely than a W-2 to be audited by the IRS, said Gene Zaino, president and CEO of MyBizOffice Inc.
According to Zaino, there are essentially three tax categories for individual IT contractors:
- Sole proprietors: Individuals who conduct business on their own and file a 1099 for each company they work with.
- Members of S corporations or limited liability corporations/partnerships: The former is an umbrella corporation of smaller organizations, which allows for simpler individual tax filings and record-keeping. The latter, while different in a business sense, is nearly identical in terms of taxation.
- Journeymen: Individuals who work for organizations that send them from place to place, much like a staffing company.
MyBizOffice, an employment and financial services provider, offers IT professionals a “fourth way” to approach their tax filing, Zaino said. “We’re not a staffing firm. We’re yet another category, what we call ‘portable employment.’ What we do is if they’re an independent contractor, we would tell to join MyBizOffice and we would actually set them up as a separate business entity—we call it a business center—with MyBizOffice. Think of it as…
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