HomeCareerConsultants: Corp-to-Corp vs 1099

Comments

Consultants: Corp-to-Corp vs 1099 — 24 Comments

  1. Pingback:Consultants: 1099 or W-2? | James Serra's Blog

  2. Pingback:Blueprint for consulting riches | James Serra's Blog

  3. Can anyone tell me about how much% payroll services companies charge IT contractors? Also any recommendations of companies that provide tjis CORP to CORP billing/payrolling services to IT contractors?
    Thanks

  4. If I contract on a C2C basis and provide my company’s FEIN, do I also have to provide my personal SSAN to any entity that is not my own company? In other words, will my company’s FEIN suffice given that my company, of course, does have my SSAN and uses the latter to pay me via its payroll? Thanks in advance for your answer(s).

  5. If I contract on a C2C basis, so that my company as the subcontractor provides its own FEIN for payment and other purposes, do I also have to provide my personal SSAN to any entity that is not my own company? In other words, will my company’s FEIN suffice given that my company, of course, does have my SSAN and uses the latter to pay me via its payroll? Thanks in advance for your answer(s).

  6. Great article. Thanks for the info, you made it easy to understand. BTW, if anyone needs to fill out a form 1099, I found a blank 1099-MISC form here http://goo.gl/DvBdLq. This site PDFfiller also has some tutorials on how to fill it out and a few related tax forms that you might find useful.

  7. Pingback:How To Fix 0x8009000b Certificate Errors - Windows Vista, Windows 7 & 8

  8. I have started a consultancy , so want to know how does a corp to corp work.
    What are the steps and processes? please guide me on this.
    Thanks

    • Corp to corp simply means that you need to have an entity through which you will conduct business. Typically, you would form an LLC or a corporation and have it elect to be taxed as an S corporation. There are several moving parts, but here’s a high-level of the steps involved:
      1. form an LLC
      2. obtain EIN
      3. File Form 2553 (S corporation election)
      4. open business bank account(s)
      5. provide Form W-9 to your client(s)
      6. set up payroll (to pay yourself)
      7. file quarterly payroll reports
      8. pay quarterly estimated tax payments
      9. stay on top of bookkeeping
      10. prepare/file annual S corporation tax return

      If you have any questions, don’t hesitate to reach out. I’m happy to help.

      • Hi. I’m so sorry to be ignorant of this whole corp2corp. I’ve been an IC for 25 years & on occasion I’ve hired subs when work was heavy. However CA passed AB5 Which cause my only client of 15 years to cut me off. I spoke to an atty who said nothing can be done but this sounds like an option. However, idk what it means when you say they pay your company through your business acct & then you pay yourself. If they pay me through my business account that I access, isn’t that MY payment to me? Sorry if this is a stupid question.

        • Yes, you are paying yourself. I did this based on advice from a good accountant who knows about LLC’s and did this for tax reasons. Find a good accountant who can help you with this.

        • It’s not a stupid question. Hi Tami, I’m a CPA. After forming your legal entity (usually an LLC taxed as an S corporation), the contract would be between your company and the client. It’s no longer a contract between you and your client. Then, the client pays your company and your company pays you a salary & dividends. It basically just creates a layer between you and your client. This can sometimes satisfy AB5 requirements and can also reduce your overall taxes.

      • I am contemplating to start a s corp for submitting my profile to companies as c2c. The question is should I form an LLC and then file the form 2553 as indicated above?
        More specifically why would one form a LLC instead of S corporation if they have to file form 2553 with IRS.

  9. The concept of corp to corp came about due to an IRS regulation that required third part service providers in certain technical fields (IT is one of them) to be classified as employees. This happened in the 1980’s.

  10. Why would clients ‘make you’ adhere to a C2C checklist? Does the IRS in any way make the client-firm responsible for an individual who falsely purports to be a corporation?

    • It’s good “audit repellent”/CYA practice, and weeds out the true professional from the wannabes. A legitimate company would not hesitate to show these items to the client. Most of the time, the *client’s* insurance company needs these things to C their own A. If the sub messes up, who’s gonna pay?

  11. Recently there has been a change in the laws in the US where government agencies are classifying contractors as employees. In order to protect the company how can be these below mentioned points be included in the contract.

    A. Corp to corp employer attests to having more than 1 employee
    B. Few months later the headcount drops to 1 employee

    It could be very great if you can share a Draft Clause.

    • If I’m misunderstanding your question, I apologize. To do “corp-to-corp”, you must first have an LLC or corporation. Then, you will elect S corporation status using Form 2553. Once that is filed with the IRS, you will provide a Form W-9 to your client(s) that indicates you have an S corporation.

      Moving forward, you will be Filing Forms 941, 940, and 1120S in addition to state forms depending on where you live.

      I’m Happy to help with any questions you may have.

Leave a Reply

Your email address will not be published. Required fields are marked *

HTML tags allowed in your comment: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>