Students can prepare for employment opportunities and their benefits

Independent employees can analyze medical insurances, tax agents and annual deductions when creating a business. (Andrea Clemett/ Lariat)

Weighing pros and cons for careers classed as W-2 or 1099 employment

Upon graduating from college, students embark upon a journey to pursue their studied profession with an degree or specialized certification from Saddleback. In addition to examining salaries when applying for careers, candidates may also consider flexibility in the field, work among teams, evaluate tax payments, unemployment benefits, health insurance and business expenses. Working for a company acquiring compensation or independently becomes an important decision.

When planning for job placement students may discover what fields offer freelance opportunities or working for one specific employer and the benefits of pursuing one or the other. Some vocational fields may overlap when individuals choose their desired path but each has its distinct advantages and disadvantages.

Taxes for both types of workers pay into social security in the accumulation of quarters or 10 years of working in order to receive benefits upon retirement. A worker who receives wages on an IRS W-2 Form commonly works set hours as established by the company on a fixed schedule. Whereas, independent workers’ income under a 1099-MISC, find themselves taxed at a higher rate than the same earnings than a W-2 employee. The contractor pays 15 percent of the employee and employer tax, entitled the “self employment tax,” according to quora.com. This designates that one would pay a total of 30 percent of net profit dollars earned in the duration of the 1099 year.

Those who work independently or “freelance” essentially work for themselves by setting their own structure of the business, payment schedule and hours. Job opportunities include such jobs as software developer, writer, blogger, hair stylist, real estate agent, esthetician, photographer and online marketer. Common jobs for a W-2 include restaurant chef, nurse, teacher, accountant, engineer, surveyor and banker.

According to an article from Thinkprogress, hair stylists progressed rapidly into independent contractors at a rate of 83 percent over the last decade. In a recent study, 90 percent of beauty salons have no direct employees paid on a W-2 and 34 percent of cosmetologists and hairstylists classify their work as self-employed.

“The industry is constantly evolving and hairdressers are able to create freedom to structure and craft their own businesses,” Dannielle Gallo said, salon owner and image consultant. “Today’s world offers countless resources for independent contractors such as business workshops, marketing courses and learning to work directly with a tax agent in organizing quarterly payment plans. It pushes stylists to develop social media skills, photography and branding their business.”

Job seekers can find alternative methods of planning for independent businesses. (Andrea Clemett/Lariat)

Job seekers can find alternative methods of planning for independent businesses. (Andrea Clemett/Lariat)

Costs contributing to managing businesses can deduct those expenses through the company. Some deductions from gross wages range from 50 to 100 percent of coverage such as supplies, travel, meals and entertainment expenses. As an independent employee or employer, they can write out contracts to insure that each party fulfills the agreement.

Diane Galvan a senior graphic designer for Fox Racing indicated when she previously worked as a freelance designer she had flexibility with her schedule and less distractions in working by herself. She had a wide range of clients with challenging and interesting work that she described as continuously diverse.

Galvan stated she could set specific dates to accomplish each project. Although she had flexibility, she stated drawbacks to working freelance such as not having a steady paycheck if working from contract to contract. In a report from AIGA, 19 percent of of graphic designers classify themselves as freelance in Los Angeles, earning an average of $57,000 annually.

“In the past it was hard to turn down work because I wouldn’t know if another opportunity would come so I would just take what I could get no matter if was a small or big project,” Galvan said. “I often felt extremely busy and sometimes took on more than what I could chew. That resulted in a lot sleepless nights without maintaining a healthy work and life balance.”

For business owners and those who work independently with health insurance not covered through an employer, they can seek coverage through Obamacare depending on their age and location. For instance, a lower end silver plan covers 70 percent of costs, will be determined by income and family size.

A single person who earns over $47,520 will entitle them to a government subsidy, with a monthly premium 9.5 percent of their total income. The subsidy equates to the cost of the monthly plan and one’s annual subsidy totaling $485 is deducted from $5,000 per year according to thebalance.com.

“The pros of having a full time job is having the steady paycheck with taxes deductions taken out of each paycheck, qualifying for health, dental, eye care benefits and a 401K plan,” Galvan said. “It is kind of nice to just received a W-2 at the end of the year without having to figure out all my recipes for expenses and compute taxes.”

Both employees and self-employed individuals provide savings to retirement accounts. Employees can pay into through their employees for a 401k program for additional retirement from social security whereas independents can open a retirements savings plan, IRA’s tax free plan based upon their income level.

Licensed vocational nurse, Donna Sanchez, worked freelance nursing jobs until she began working at retirement community, The Fountain at Sea Bluffs in Dana Point. Currently she works part-time and returned to school for her registered nursing license in order to receive more clearances for other patient services.

Her position entitles her to automatic deductions into social security but without health insurance or retirement due to her part-time status. Although Donna freelanced while earning a living, the driving force to work for a company revolved around working with a high volume of clients.

“Working for different companies has allowed me to gain experience and learn from different people, from pediatrics, hospice and geriatrics,” Sanchez said. “My objective, after receiving my RN license, is to apply for a job that ideally offers benefits and a retirement plan.”

Outlining benefits desired in a workplace can contribute to the selection of a vocational field. Students can research fields or speak to college counselors in considering future careers.
Students need to look beyond the pay being offered and delve into those other areas that ultimately translate into dollars gained or lost over a year’s time.

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