1099 Vs W2 Agent Pay

[LifeHealth]

I'm a new agent and I currently get a 60-40 split with the agency and I'm a W2 employee. They gave me a couple hundred individual ACA customers(their whole health book) when I started as a defacto salary. I've owned several businesses in the past and am interested in 1st if I'm getting a good deal and 2nd how easy is it to 1099 agents like me? I think I'd be better off being able to write off car, phone, meals, home office and such. Any advice would be greatly appreciated!

 

[LostDollar]

I don't know enough about employee/contractor stuff to say definitively you could be a contractor; however if you are basically functioning as an employee now and the only thing that would change is the way you are paid, both you and your employer could have some conflict with the IRS over an inappropriate contractor status.

Here's an IRS link you can see if provides any additional help for you.
https://www.irs.gov/businesses/smal...ependent-contractor-self-employed-or-employee

 

[DHK]

I'm a new agent and I currently get a 60-40 split with the agency and I'm a W2 employee. They gave me a couple hundred individual ACA customers(their whole health book) when I started as a defacto salary. I've owned several businesses in the past and am interested in 1st if I'm getting a good deal and 2nd how easy is it to 1099 agents like me? I think I'd be better off being able to write off car, phone, meals, home office and such. Any advice would be greatly appreciated!

Depends on what your commissions generated, deductible expenses, and what they reimburse you for. Also, I might assume that a portion of your earnings has FICA match based on W2 earnings.

Without that information, we can't figure out what way is best for you.

 

[LifeHealth]

My current book gross is about 7500-8500 gross and 4500-5000 to me. I have an actual office at a full service agency and I'm the only one who does under 65 and life insurance. I love the 2 guys I work for and they have been great mentors not to mention lead generation, office space, advertising, equipment, etc. I plan on staying here for a long time and don't have a big desire to go out on my own but having owned different LLC and Scorp's I just wish I could take care of my own taxes so I can write off stuff and lower my tax burden.

They don't offer any benefits so I wouldn't be losing that at all. I do know lots of agents in my same position do get a 1099 but not sure if thats right or not.

If you guys think its better to stay a W2 employee I guess I could always start a side business so I can still take advantage of write offs and just have negative K1 income to cancel out some W2 wage. I know its doesn't seem worth it now where income is estimated at 50k a year but hopefully I won't be at 50k for long.

 

[DHK]

Looking at it, it's not about your compensation. It's about retaining ownership and control of the book of business. By hiring you and paying you a salary + commission split, they still own that business and (probably) any new business you bring in. I bet you can't just walk away with their clients and continue to sell them your products.

Look at your 'divorce clause' and you'll probably see a non-solicitation agreement in there for 1-2 years after you leave.

 

[LostDollar]

The thing I remember about this issue is something about control of activities.

If op is dividing commission with agency plus having to fill an office during time agency is open plus working agency generated leads I don't think agency owner's cpa would allow them to treat op as contractor.

 

[MW Agent]

You can stills deduct expenses and mileage as unreimbursed employee expenses on your Schedule A. The downside is you can only deduct the amount that is more than 2% of your AGI. But you are also saving half the FICA cost of 7.65% that they pay for you. It sounds like a very fair arrangement for now. Obviously you can renegotiate later as your production grows.

 

[LostDollar]

How do cell phones work on that unreimbursed bus expenses?

Can you allocate costs to bus activity and put part of the monthly billing in the unreimbursed expense bucket too?

 

[MW Agent]

How do cell phones work on that unreimbursed bus expenses?

Can you allocate costs to bus activity and put part of the monthly billing in the unreimbursed expense bucket too?

In general, the answer is yes. You may even be able to depreciate the business use portion of the phone as well. The employer must require you to have the cell phone as part of your job. There are some various precendents set over what exactly that means.

 

[LifeHealth]

They do own the book, and its a 1 year non compete. I have no desire to leave them! They treat me great and value you me, it is hard being an employee when I've been an employer for the last few years, but its nice when I leave work I don't have to worry about anything.

I would get around paying payroll tax by creating an Scorp to filter money through. I'll have to look into the non reimbursed deductions I guess.

Thanks for all of your help, I appreciate it. I love this forum.