A Business Owner or Just an Employee?

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As a young person entering the corporate world I was not aware about the difference between owning your own business and being a 1099 employee. As a 1099 employee I was told by several of my employers that I was an independent contractor. Basically, working for a 1099 was equated with being a business owner. However, a 1099 does not give you the same privileges as owning your own business. A 1099 tax form does create more obligations.

As a so-called independent contractor I was neither independent nor a contractor. I was actually working as a regular employee who was not receiving any benefits and was charged twice as much in taxes at the wnd of the year. A W2 employee pays fifty percent of the tax amount that is charged to the 1099 employee. In addition, a W2 employee gets a tax refund at the end of the year.

A business owner may have to pay more taxes than a W2 employee. However, a business owner also has a lot of various write offs that he or she can use to minimize their tax burden. A business owner works for him or her self. Their income comes from a wide variety of clients. A 1099 employee usually gets all or most of their earnings from one company.

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