This is BS.They want you to incorporate so they can claim they are outsourcing the work to a corporation and then just write you a check. They want all risks, burderns, taxes, etc. to be your problem. They most certainly won t be paying you enough to do this. Besides, an employee is NOT a contractor. You, in turn, would then have to track all income, all expenses and issue yourself a W-2. See IRS pub 1779 and form ss-8.
For every dollar paid for payroll, roughly 30 or 40 cents more is paid by the employer towards tax s (Social Security), benefits and time off.If you are a contractor, then they pay exactly your invoice. You get stuck with the extra tax s and if you want time off, no one is going to pay you. Insurance is now going to be paid by you $$$Life is a little more uncertain as a contractor. Your clients can say, nothing today , and your stuck with no work for the day.If your a contractor, you need a billing rate to cover all of the above. So will your current employer agree to that? When I do the math, I need about double the hourly wage, to make up for the uncertainty and the extra tax s, etc..
It helps them avoid all the appropriate taxes such as workers comp, social security, medicare, unemployment premiums, etc. As an independent contractor, you will be expected to pick up the employer portion of SS/Medicare, won t qualify for unemployment, etc. Unless they are offering you a 25% increase in salary and payment of all fees, this is not in your benefit - especially if they are providing health insurance and other benefits.
This is for them not you. You have to pay all the employers contribution to taxes and since you are not an employee, no benefits like vac. pay, medical dental They want you to do it likely so they can stay afloat.
