How a Tax Law Helps Insure a Scarcity of Programmers (1998)
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Re: How a Tax Law Helps Insure a Scarcity of Programmers (1998)
#2Thanks for posting this. It provided the best explanation so far (for me, at least) of the law that so pissed off Joe Stack.
Re: How a Tax Law Helps Insure a Scarcity of Programmers (1998)
#3Does this mean if you're a freelance programmer, you're at risk of running afoul of this law - as Joe Stack did - if you're trying to negotiate programming contracts directly with the client rather than through an agency?
My understanding is that you can protect yourself from this law by working through employment agencies as a W2 or Corp-Corp contractor?
Is that correct?
Is so, then perhaps the programmers I've met who said they were "independent consultants" were likely working through agencies since the risks of being truly independent are too high?
Re: How a Tax Law Helps Insure a Scarcity of Programmers (1998)
#4Anyone know if any laws like this exist for Canada?
Re: How a Tax Law Helps Insure a Scarcity of Programmers (1998)
#5Does this mean if you're a freelance programmer, you're at risk of running afoul of this law - as Joe Stack did - if you're trying to negotiate programming contracts directly with the client rather than through an agency? My understanding is that you can protect yourself from this law by working through employment agencies as a W2 or Corp-Corp contractor? Is that correct? Is so, then perhaps the programmers I've met…
The article says that if you're incorporated, and the only person hired, it changes nothing.
Re: How a Tax Law Helps Insure a Scarcity of Programmers (1998)
#6Anyone know if any laws like this exist for Canada?
They do not. Anyone is free to create a sole proprietorship/partnership/corporation provided that there is not national security implications ("Pam and Tom's Atomic Weapons" - Disallowed "Pam and Tom's Fighter Craft Displays" - Allowed) or confusion in the marketplace or depletion of nation resource (fishing companies, dairy companies, logging, etc). Actually, small business law in Canada is extremely well thought out. There is rarely a tax reason to incorporate, unlike other companies. For example, incorporating and paying out dividends will run you just as much tax as running as a sole proprietor. Usually. There are tricks you can pull, Turks and Caicos QA companies that reduce your profit to nearly 0 but reinvest the profits overseas. Plus IRAP funding is intense if you are large enough to float a couple salaries and you can handle mountains of paperwork.
Re: How a Tax Law Helps Insure a Scarcity of Programmers (1998)
#7Does this mean if you're a freelance programmer, you're at risk of running afoul of this law - as Joe Stack did - if you're trying to negotiate programming contracts directly with the client rather than through an agency? My understanding is that you can protect yourself from this law by working through employment agencies as a W2 or Corp-Corp contractor? Is that correct? Is so, then perhaps the programmers I've met…
Some clients, usually larger ones, can be risk adverse to working directly with an independent contractor. Its not hard for an independent contractor to be "independent" per these tax rules. However, many clients don't want to take the risk that the contractor is doing their end right. Whether this is real or perceived risk on the part of the client is not clear to me.
The bottom line is if you are an independent contractor, you should do all your work through an LLC or S/C-Corp and manage your tax filings well. Some clients may still not accept dealing with your LLC directly and hand you a list of "approved contractors" to bill through. The only way you may get in trouble past this is if all you work is for one client and the IRS feels your really acting as an employee.
Re: How a Tax Law Helps Insure a Scarcity of Programmers (1998)
#8For those who didn't read all the way down, this law was passed in order to pass a tax cut on overseas operations that IBM was lobbying for. PAYGO rules and all that.
Your congress at work -- raise taxes on the little guy in order to give tax breaks to the wealthiest.
Re: How a Tax Law Helps Insure a Scarcity of Programmers (1998)
#9[deleted]
Re: How a Tax Law Helps Insure a Scarcity of Programmers (1998)
#10Does this mean if you're a freelance programmer, you're at risk of running afoul of this law - as Joe Stack did - if you're trying to negotiate programming contracts directly with the client rather than through an agency? My understanding is that you can protect yourself from this law by working through employment agencies as a W2 or Corp-Corp contractor? Is that correct? Is so, then perhaps the programmers I've met…
Some clients, usually larger ones, can be risk adverse to working directly with an independent contractor. Its not hard for an independent contractor to be "independent" per these tax rules. However, many clients don't want to take the risk that the contractor is doing their end right. Whether this is real or perceived risk on the part of the client is not clear to me. The bottom line is if you are an independent con…
On the tax side, there is W2 or 1099. When you get W2(salary), taxes are usually withheld. In case of 1099 no taxes are withheld. So, you(as the contractor or LLC owner or Corp owner) have to estimate taxes every quarter.
LLC and Single person corps were treated badly 10yrs ago. Now pretty much every state recognizes LLCs/S-Corps and yes, one can be owner and single employee.