Fund says I am an independent contractor - 10-99 vs W2

NewUserOldMan's picture
Rank: Monkey | 43

Did you ever work at a place that treats you as an independent contractor vs W2 worker? Thoughts on joining a fund that does? LA/SF/NYC areas.

I'd have to incorporate as an LLC.

Comments (12)

Dec 22, 2017

This is standard for some employees. Funds do this for tax purposes.

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Dec 22, 2017

Thank you for your reply!

Dec 22, 2017

Bumping for Christmas cheer

Dec 23, 2017

Read up on the irs rules regarding independent contractors. I would be very surprised if this was legal.

There are some further implications with clarifying your agency for the firm if you're dealing with outside vendors/clients/lps, etc.

I took a business law class once. So by no means an expert.

Dec 23, 2017

I agree that it doesn't seem like most investment employees should not be classified as an independent contractor. Independent contractor classifications are for people who perform a service for you, but who you do not have significant control over with respect to how they do it. An example would be FedEx "contractors". Those people actually own their own trucks and determine what route they want to take to deliver goods. But investment work is much more nuanced than that. If you're interacting day to day with people and your firm tells you not just what to do, but how to do it on a regular basis, it seems like a stretch to classify such work as contracting work.

That being said, if you are paid enough, under the new tax law it may be beneficial no? If you are paid as an LLC you could have a lower tax rate as long as you don't pay too much out to yourself as an employee of that LLC right?

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Dec 24, 2017

Think the firm carries employee classification risk so no issues for op.

As regards pass through tax impact it exempts employees who provide "professional services" to combat exactly what you're describing (excepting real estate investment firms I believe to reward the president and his men). So op doesn't benefit from a tax rate perspective but hey you can expense anything like a corporation now I believe...

Dec 27, 2017

Do mega funds not provide 401k and health care insurance also? I thought most reputable ones do.

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Dec 27, 2017

They are not eligible for those as 1099. Op would be an employee of his own company. He would have to pay fica for himself and then also estimated taxes throughout the year. The fund is trying to screw him

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Dec 27, 2017

It is legal and it's not a good deal for you, pass unless you're desperate

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Dec 27, 2017

I think there should be some overall tax savings that could result in a positive outcome even if he has to pay his own unemployment insurance etc.

It depends if his company is giving him extra comp to more than cover those expenses.

Lots of ppl are trying to do exactly this under the new tax bill.

Dec 27, 2017

This is all troubling news guys - thank you!

Dec 29, 2017
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