If you have additional questions that are not answered below, feel free to call us directly.
1) Should I take a contract? I have always had a full time job.
Many candidates ask us the advantages of going contract vs. perm. There are many factors to consider, and only you can decide which is right for your circumstances.
• Potential for stock options
• Retirement plans
• A place to belong
• A nice office/work area
• Continuing technical education, and
• Career growth.
• More potential for paid training
• Risk of being "pigeon-holed" on one project or application
• Greater likelihood in some companies of doing strictly maintenance
• Lower cash compensation than with contract
• Fewer professional contacts in the development community
• Unpaid overtime, and
• Lack of variety at some companies
• Increased income
• Project variety
• The chance to experience a company before you commit to full-time employment
• Quick hiring decisions
• Paid overtime
• The chance to build your professional network rapidly and stay on the bleeding edge of technology
• Lack of stability
• The risk of being released on short notice
• Lack of a defined management career track
• The necessity of making a quick decision on offers
• Less-than-ideal working conditions at some companies, and having to interview more frequently.
2) How will I get paid? If you decide to go contract there are three ways to get paid:
c) 1099 (an unincorporated sole proprietor).
You will most likely get paid W2. If you have a corporation or LLC then we can contract with your corporation or LLC to pay on a corp-to-corp basis. If you do not want to go W2 and you do not have a corporation, then the only other option is 1099, but we rarely approve 1099 payments. Why? The IRS is on the warpath with new weapons to track down companies that violate rules used to determine whether workers are employees or independent contractors for tax purposes. The result: more employment tax audits in a few months after the IRS generates more leads. The IRS has also signed agreements with 33 states to share data from payroll tax exams, is conducting joint training with state auditors, and is even doing joint exams. The IRS is jazzing up its matching software to better pinpoint audit leads and lessen chances for no-change exams. A significant change is a new electronic matching program that lets the IRS spot businesses issuing 1099 forms with payments of $25,000 or more to at five or more workers who have no other sources of earned income. The IRS suspects that these people may actually be employees for tax purposes. What all this means to us is that the people in charge of payroll at our company, as well as any officers of the company, can be PERSONALLY held jointly and severally liable for any unpaid employment taxes and income taxes if the 1099 contractors fail to pay what is required. GTN is not willing to expose its people assets to that level of risk. The checklist for determining if someone is an independent contractor or an employee for tax purposes is lengthy, somewhat subjective, heavily debated, and skewed in favor of the IRS, and it is likely that most 1099 contractors would have difficulty passing the test. Defending a classification as an independent contractor would be expensive no matter what the circumstances, so from now on 1099 contractors are absolutely prohibited if we expect them to earn $20,000 or more in a calendar year. If someone is a one-man corporation or subcontracted through another agency then we are going to require a certificate of incorporation or certificate of organization as well as a business bank account as proof that there is a separate company.
3) How do I create a corporation or LLC?
Everything you need is at http://www.sos.state.tx.us/corp/index.shtml.
4) How do I get a federal tax ID number?
5) Can I get a per diem?
A per diem is a flat dollar expense reimbursement allowed by the IRS in place of individual receipts for meals and hotel stays. The amount of the maximum reimbursement depends on your travel destination and whether it qualifies as travel expense or is really commuting. Per diem rates are set by the General Services Adminsitration and can be found at http://www.gsa.gov/Portal/gsa/ep/contentView.do?contentType=GSA_BASIC&contentId=17943.
Generally if you are traveling for work and covering the costs of meals and lodging and we agree to reimburse you the per diem rates, then that reimbursement is not considered taxable income by the IRS.
6) How long will my contract last?
An average contract is about 6 months. Many go for several years, and some end if a few days (not always on good terms). While you are not legally bound to stay the duration of your contract term and we and our clients are not legally bound to keep you for the duration, it can be a bad career move to leave a contract early, especially without working with your supervisor to coordinate a transition.
7) How does COBRA work?
COBRA in Plain English
GTN Technical Staffing’s insurance coverage ends on the last of the month in which your employment ends. In other words, even if your employment ends on the 2nd day of the month, your insurance coverage ends at the end of the month. We have to send you a COBRA notice letter within 14 days of the end of your employment.
GTN Technical Staffing’s consultants have 60 days from date of notification (COBRA letter) to elect COBRA. Individuals electing COBRA must mail in the initial COBRA premium within 45 days of their election. If you take the maximum time to elect (60 days) you can then go an additional 45 days before paying your initial premium. If you want to minimize cost but keep your options open, you can theoretically wait 14 + 60 + 45 = 119 days until you have to pay anything, and by that point you probably will have found new insurance, thus relieving you of the need to pay the premiums. You must be VERY careful to not miss those deadlines, because doing so can disqualify you from coverage.
Please note that in order to keep your coverage you must bring the premiums current at the time of the payment in order to sustain coverage. Thus, if you took the maximum 14 + 60 + 45 (119 days total) you would need to pay 3-4 months worth of premiums that were due. If you make less than full payment, monies would be applied to the oldest premiums outstanding first. If it does not bring you current, you may be subject to cancellation effective the last full premium.
If you have additional questions that are not answered above, feel free to call us direct.