Contractors in the Entertainment Industry-All You Need to Know

Working in entertainment as an entertainment technician or stagehand? Chances are you are thinking of becoming an independent contractor. What exactly does it mean to be an independent contractor in the entertainment industry?

• Are independent contractors freelancers?
• How are they paid?

Keep on reading this comprehensive guide to discover everything about independent contractors in the entertainment industries.

WHO IS AN INDEPENDENT CONTRACTOR?

According to the IRS, independent contractors are professionals who are in an independent trade. Employees cannot control what the independent contractor does and how it is done. However, employees have the right to direct and control the result of the work. Independent contractors work on a contract basis and can be sole proprietors, professionals with limited liability partnerships, and freelancers with incorporated business.

INDEPENDENT CONTRACTOR VS. W2 EMPLOYEE

Independent contractors also referred to as 1099 are self-employed and receive payment according to the terms of their contracts. They are referred to as 1099 because they use it when returning tax. On the other hand, W2 employees receive regular wages and benefits. Employers have major control over the work of a W2 employee. The following are the differences between independent contractors and W2 employees:

* W2 employees receive a regular wage and work part-time or full time according to the wishes of their employers. Taxes are withheld from their wages. Independent contractors, on the other hand, are paid for projects and work when they want. They are responsible for their taxes.

* Independent contractors do not receive employee benefits that W2 employees receive. Moreover, employment laws do not protect them. They are not covered by insurance if they get injured like is the case with W2 employees.

The IRS uses three major metrics to differentiate independent contractors from W2 employees. The three categories include:

* Behavioral

This category looks at the degree of control that a business has over its workers.

* Financial

The financial aspect provides more information on the degree of control the payer has over the workers. The IRS looks at specific financial factors like worker’s payment, expenses, and the provider of tools and supplies.

* Type of Relationship

The IRS focuses on the existence of written contracts and employee benefits to determine if one is an independent contractor or an employee. The duration of work and the significance of the performed task to the business.

It is important to note that businesses should weigh all these factors when determining the status of the workers. Business owners should also know that all factors play an equal role. You can file Form SS-8 if you are still not sure if you are an independent contractor or W2 employee. Simply put, you are a stagehand and event technician independent contractor if you do the following:

* You earn a profit or suffer a loss from the action.
* Provide all the required tools for the job.
* You are paid per job.
* Independent contractors set their own working hours.
* You invest in equipment and faculties.

HOW TO PAY TAXES AS AN INDEPENDENT CONTRACTOR

Since independent contractors are self-employed, they are required to pay annual self-employment and income taxes to the IRS. The self-employment tax is a Medicare and social security tax. Independent contractors are required to determine their net loss and net profit before making tax returns. They should file an income tax on the 1040 tax document when their profits are more than the expenses. The income tax should be more than $400.

BENEFITS OF BEING AN INDEPENDENT CONTRACTOR

* Be Your Own Boss

Working as a stagehand and event technician independent contractor allows you to decide when, how, and where to work. You can also choose the amount of work to get since it is dependent on the quality of work you provide.

* Earn More Money

Working for someone earns you less money than working as an independent contractor. However, your negotiation skills will determine how much you make.

* Enjoy More Flexibility

Working as an independent contractor allows you to create your schedule. Besides, you can handle your personal life as well as your set schedule.

* You Will Get Several Tax Benefits

As an employee, you will not get any tax deduction benefits. As an independent contractor, you are assured of several tax advantages that will help in your retirement plan.

* Try Out a New Industry

This is because you will not have any tension to have a full-time job. It is therefore possible for you to try out a new industry without having any commitments.