Understand Your IT Job Options
There are a few different ways to become employed in the IT industry
. Many companies offer permanent, full-time positions that are offered with comprehensive benefits packages. Generally, permanent positions entail automatic taxation deducted from each paycheck. This is the type of employment most people think of when looking for a job. However, many companies in the IT industry also hire contract employees. Contractors can be temporary, part-time, or even full-time, and the taxation works a bit differently depending on the type of contract placement. The Centrics Group works to connect you to the employer and placement type that best suits your needs and lifestyle.
With a W-2 contract, your agency will deduct all related taxes from your paycheck. Additionally, your hourly rate will typically be less than on a 1099 or Independent (Corp-to-Corp). This is due to the burden put on the agency.
- Easiest and simplest option.
- No bookkeeping needed, other than submitting time sheets.
- Some limited benefits may be available.
- Limited ability to defer income if a 401(k) benefit plan is unavailable.
- Deductibility of unreimbursed business expenses and medical insurance premiums is very limited.
- Getting health insurance coverage can be a challenge if none is provided.
- Any benefits package is likely to be less generous than that of a permanent employee’s.
On a 1099 contract, you will be able to get a higher hourly rate and you must file your own taxes. You will also be eligible to write-off more work-related expenses.
- Easy to get started.
- Easy to discontinue when your contract ends.
- Losses can be used to offset other income (limits apply).
- Small business retirement plans offer the opportunity to defer a more current income than traditional IRAs.
- You might be eligible to take the Home Office Deduction.
- Unlimited liability for the owner.
- All profit is subject to self-employment tax in addition to the income tax.
- More administration and bookkeeping than W-2 option.
- You must make quarterly estimated tax payments.
Corp-to-Corp is similar to a 1099 in that you will receive a higher hourly rate. However, in this case, you must have a registered corporation with a Tax ID number. Your paycheck will be paid to your corporation, not you as an individual, so you will need to have a checking account under that corporation name.
- No self-employment tax.
- Using small business retirement plans, you can defer tax on a larger percentage of income.
- Double taxation of earnings is avoided as compared to regular corporations.
- Most complicated option. Much more bookkeeping and tax reporting required.
- More difficult to organize and dissolve.
- Some states have a minimum tax you will have pay regardless of profitability.
- You must receive at least some salary from the corporation, which means the corporation is subject to payroll taxes and filing.
- S-Corp shareholders pay tax on undistributed profits.
- If you don't make the S-Corp election, you can get stuck with the 35% Personal Services Corporation (PSC) flat tax.
The Centrics Group connects with IT job candidates with a variety of skill sets and certifications, including (but not limited to):
Java, J2EE, C/C++, Visual Basic, ASP, C#, VB.NET, ASP.NET, ADO.NET, PHP, Perl, Flash, Flex, CML, HTML, DHTML, XHTML, SQL, PL/SQL, iPhone, Blackberry, Android, iPad, SAP, JD Edwards, PeopleSoft, Oracle
Windows, Unix, Linux, Solaris, AIX, HP-UX, Informix, SQL Server, DB2, Oracle, Access, Mercury Quality Center, QTP, Basis, Active Directory, Exchange, IIS, MOSS, SCCM, SCOM, Sharepoint
Cisco, Avaya, Juniper, VMware, HP, EMC, LAN, WAN, SAN, Voice, Wireless, Security
MCP, MCSD, MCSE, CCNA, CCDA, CCDP, CCNP, CCSP, CCVP, CCIE (Routing & Switching, Voice, Security), Juniper, VCP, Avaya, EMC, HP, PMP