I found a couple of interesting sites that convert independent contractors from a 1099 to W2 employees. I don’t know what their fee schedule is, but it is definitely an interesting concept. As a W2 employee, you get corporate benefits, while still maintaining your independent contractor status. I find the concept very provocative.


http://www.solow2.com/

http://www.mbopartners.com/#home

Here is a blurb from a plug for MBO Partners: "Basically, you come in as a 1099 and out as a W2 employee of MBO, and can take travel, books, medical, etc expenses out in the business center, thus lowering your W2 value and so paying less taxes. This is also good to show consistent employment if that's important, so even though I have had many different contracts over the years, I show my employer as being MBO Partners for the past 9 years. They do all contract negotiations with your client companies, with your input and approval. They provide Errors and Omissions and Professional Liability insurance as part of the fee structure (at $1M and $5M). You can also put much higher amount of you pre-tax income into a retirement plan than as a regular employee, once again reducing your taxes. Mostly though it allows me to concentrate on my work and no worries about the business end of things, while still maintaining a status as an independent consultant."

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Collaborative Business Support

Hmmm, I don't get it... It sounds like: I pay this company to be my 'employer of record' and can then access their company insurance, employee benefits, etc.?

Peppy, just curious what you think about this and how you feel it could be beneficial to you as a business owner?

It is an interesting concept - I'm just not sure I trust it

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Originally Posted by Tess

Hmmm, I don't get it... It sounds like: I pay this company to be my 'employer of record' and can then access their company insurance, employee benefits, etc.? Peppy, just curious what you think about this and how you feel it could be beneficial to you as a business owner? It is an interesting concept - I'm just not sure I trust it

I read a testimony of one independent consultant. By the sound of his story, he makes far more money annually than I could ever imagine making as a VA. He posted on a forum and was really gung ho about one of the companies. He said that it not only helps take some of the self-employment burden from him, but it also allows him to fill in gaps in employment by being able to claim that he actually was employed by the business.

As far as I am concerned, I like the concept and the convenience of their services; however, I would imagine that their fees are steep and would only be useful for an independent, who perhaps, makes six figures a year. It's a no go for me; but, I wanted to put the idea out there for anyone else, who might want to look into it. Thanks for asking my opinion, Tess.

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Collaborative Business Support

I'm not comfortable blurring the lines between being an employee and a business owner. The mindset is different, for one. The only true benefit of that from my perspective is if you use a resume to obtain work and, as a VA, I don't provide a resume. I personally would rather NOT be considered an employee while trying to sell my services as a business.

This may be a good fit for some folks who are not comfortable with the concept of being a business owner and prefer to think of themselves as employees. However, you have to generate your own leads and business and you are basically paying for someone else to handle your paperwork. Yes, the health insurance is a benefit, but you are still paying the premiums. Again, you are primarily paying someone else to handle your paperwork.

The fee is 5% of your gross for both solow-2 and mbopartners, and you must generate a minimum of $5k/month income so their minimum monthly fee is $250/mth, for a minimum cost of $3,000/year and obviously increasing as your income does, as well. At my billing rate, I can still do my paperwork in less time per month than the $250 it would cost me for them to do it.

I truly don't see the benefits to me as a solo. Just my .02.

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Lily Chambers, The Virtual Office Goddess, LLC
Author "How to Do Your Own Small Business Bookkeeping"