Making the right decision when a Principal wants you to be a 1099 employee.
Every year I receive phone calls from candidates (Butlers, House Managers, Estate Managers, etc.) who have been confronted by their potential new principal who state they want to have the staff on a 1099 employment. This is a situation where you should not panic but you need to understand the different pay schedules. Making a choice can be a big step and have future consequences. Here are a few questions you need to ask yourself. Do you want to be an employee of the household or self-employed? What can I write off? Am I getting the “short end of the stick” on this deal? Most household staff members are usually on payroll, either through the family office or they have a payroll company take care of the payroll. There are advantages and disadvantages on both sides with regards to self-employed and employment. You will still have IRS consequences. Uncle Sam always has his hand out.
Here are some of the differences for you to consider.
*Uniforms, Laundry, Training Manuals for Staff, Special Equipment like Private Chef Utensils, Travel Miles, Computer Equipment, Depreciation of your Vehicle, Office Space in your own home, etc.
Based on an annual salary of $100,000, here are the gross and net monthly checks.
*These figures are based on $1,000 of expenses per month (some candidate will have little to no expenses (write off).
As you can see the 1099 looks as if you would be making more money at the end of the year. However, there are a few things that will come into the equation; Health Insurance. If you are a W-2, usually, the client will put the employee on the company health insurance policy or a separate health insurance policy for the household staff. There is also a possibility the client will pay you a stipend for your insurance (up to $300/$400 per month). Please also keep in mind the employer may offer a 401 K match to a W-2 employee. All of these options can work for you with a little discipline (especially if you are a 1099).
If you have any questions with regards negotiating a salary and which route is best for you contact The Robert Hanselman Domestic Agency. We would be happy to discuss which way would best fit for you. Contact us today.
