• What are the benefits of Contracting?
• How long are the contract periods?
• What is the difference between a 1099 Independent Contractor and a W2 Independent Contractor?
• General Liability vs. Professional Liability Insurance
• What is an LLC?
• Do I need insurance?

Q: What are the benefits of contracting
A: Now that you understand the differences between working as an employee or as an independent contractor, it's easy to see the appeal of contracting, particularly contracting through an agency. For someone who is self-reliant, wants to work outside of company politics and limitations and likes new and exciting challenges, a contracting career may be just the thing.

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Q: How long are the contract periods?
A: Contracts can range from six (6) months to one (1) year. MCS cannot guarantee that any contract will be renewed. The Decision to continue to use your services is left to the discretion of the hiring authority. Our officers however, will work with the hiring authority to determine the cause of early dismissal (should that event occur) or non-renewal of contracts. To date, most of our contractors have been renewed.

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Q: What is the difference between a 1099 Independent Contractor and a W2 Independent Contractor?
A: Independent contractors are not permanent employees of a company. They can work either as 1099 or W2 contractors. Both types of contractors are paid by the client or agency. The earnings of the 1099 Contractor are reported to the IRS on a 1099 form without the withholding of any taxes (federal, state, social security). However, the earnings of a W2 employee is reported to the IRS and federal and state income tax are withheld. The agency also pays the employer's share of the social security tax for W2 employees.

W2 Contractor:
Under common law, a worker is an employee (contract, permanent, direct) if the person for whom they work has the right to direct and control the way they work, both as to the final result and as to the details of when, where, and how the work is done.

When a person is paid on the form W-2, the employer withholds and pays all of the necessary employee income taxes as required by the IRS. These taxes include: Federal Income Tax, State Income Tax, and FICA (Social Securitv and Medicare). There are several advantages to working as a W2 employee including the following:

1. You are assured a regular income
2. You may be eligible for valuable benefits.
3. You are free from the headaches of ensuring that your taxes are paid to the IRS. Taxes are taken out of each paycheck and the employer's half of the social security tax.

1099 Independent Contractor:
Working as a 1099 Contractor means you are in business for yourself as a sole proprietor or as a corporation. Your clients typically issue you a contract to work on a special project. All money paid to you is paid on an untaxed basis. It is your responsibility to file and pay the appropriate taxes directly to the IRS.

Workers considered independent contractors fill the following roles:

• Work with multiple clients.
• Pays his/her own taxes and files the required government forms.
• Social Security taxes are the sole responsibility of the independent contractor.
• Obtains his/her own benefits including workers’ compensation, disability, etc. The independent contractor is not entitled to any typical employee benefits from any government agency.
• Deducts business expenses from his/her income tax.
  are several advantages to working as an Independent Contractor including:

1. Independent Contractors can offer their services to the general public instead of just one employer.
2. With multiple clients or customers, the independent contractor is free from control by any one firm.
3. The independent contractor is free to work the hours they choose, usually also free to work for more than one client at a time.

Does MCS offer any benefits to 1099 and W2 Contractors?
W2 employees may be eligible for benefits such as medical insurance coverage, sick leave, and paid vacation and pension funds. Independent contractors do not receive any benefits. As an additional service MCS provides information on insurance and pension funds upon request from its Contractors.

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Q: General Liability vs. Professional Liability Insurance
A: The two main types of liability insurance for professionals are General liability insurance and Professional Liability insurance. Both of these coverage's are important to properly protect a professional organization from financial loss.

General Liability insurance will protect an organization in the event the insured causes bodily injury or property damage to others and becomes legally obligated to pay damages. Liability for Bodily Injury can occur when a physical injury to a person is caused by third party. Liability for Property Damage can occur when a third party causes direct or indirect damage (such as loss of use of property) to another person's property.

General liability insurance is standardized and relatively easy to obtain. It is often provided in a package policy with other coverage’s, sometimes called a business office package policy. Most general liability policies issued to professional organizations contain exclusions for professional liability claims.

Professional Liability insurance is designed to provide coverage to professionals for claims arising out of their professional activities or services provided to clients. It is also called errors and omissions insurance or E&O (or medical malpractice for doctors). Coverage is typically provided by stand-alone professional liability policies and includes coverage for the defense costs associated with a claim. Coverage is not usually provided for intentional or dishonest acts.

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Q: What is an LLC?
A: An LLC is a separate and distinct legal entity. This means that an LLC can obtain a tax identification number, open a bank account and do business, all under its own name. The primary advantage of an LLC is that its owners, known as members, are not personally liable for the debts and liabilities of the LLC. For example, if an LLC is forced into bankruptcy, the members will not be required to make up the difference with their own money. If the assets of the LLC are not enough to cover the debts and liabilities, the creditors cannot look to the members, managers or officers for recovery.

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Q: Do I need insurance?
A: All 1099 Independent contractors are advised to take out a minimum of $500,000 liability insurance. W2 Contract employees are covered by MCS liability insurance (theft, negligence etc.).

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