The Pros & Cons of Being a Merrick Team Member vs. Subcontractor
Employee or Independent Contractor: Pros and cons of W2 vs. 1099
At Merrick Design and Build our mission is to build lasting relationships with nice people through serene remodels. We are always looking for nice, dependable people to join our team, either as full-time team members or sub-contractors.
Traditionally, carpenters, have been employees of larger construction or remodeling firms, such as Merrick. As the make-up of the construction industry shifts to include a new generation of carpenters many of them are choosing to fair it alone as independent contractors. At Merrick we work with both, but what does this choice really mean?
Let’s compare the options of be being a full-time carpenter at a residential remodeling firm, like Merrick, (receiving a W2 during tax season) or an 1099 Independent – Contractor. What’s the difference between an employee and an independent contractor? Let’s explore the positives and negatives to help you decide which is right for you.
Pros of Being a W2 Employee
Benefits: As a full time employee at Merrick Design and Build you get the company’s full suite of benefits, which include full healthcare coverage, with vision and dental, short and long term disability coverage, life insurance, a 401(k) retirement plan, paid time off, 8 paid holidays, paid parental leave, paid bereavement leave, cell phone reimbursement, personal vehicle reimbursement and a tool allowance. We also offer access to our trade discounts for personal projects.
Education: Most residential firms take carpentry education seriously and at Merrick we are leading the way. We have partnered with PRO (the Professional Remodeling Organization) to develop the PRO Learning Center. A national learning platform that establishes a curriculum for your employer to guide you through your carpentry career from laborer to Production Manager. Whenever possible we promote from with in. In addition, our carpenters received paid subscriptions to the Journal of Light Construction and Dou Lingo language learning app for English or Spanish. Merrick hosts regular trade partner education events and offers tuition reimbursement for relevant college courses.
Taxes and protections: As an employee, the company’s payroll department handles everything related to payroll taxes and deductions, which greatly simplifies things at tax time. Current tax laws have severely limited the deductions individuals can claim on their tax returns. Merrick offers above average benefits to ensure our in-house carpenters don’t have to pay for these items out of pocket post tax. Your net pay is yours to do with what you want. Employees are also entitled to workers compensation and overtime pay. On top of that Merrick works hard to provide a steady stream of work all year long to ensure even compensation.
Teamwork: At Merrick no one is a one-man ship. We work together to design, sell and build our projects. If you need someone to bounce idea’s off of, ask a clarifying question, or solve a problem the rest of the team is always at the ready. We use a central software, BuilderTrend, to share project plans, scope and selections. You even clock in and out on the app right on your phone eliminating paperwork.
Belonging: Being an employee can mean feeling like you belong. You’re included in company meetings and events, such as happy hours, holiday parties, and even financial reviews. The Production Managers and upper management all have an open-door policy. If you have a problem, personal or professional, they are there to offer advice and assistance. To many carpenters, being an actual employee shows the company’s commitment and investment in you and your future.
Cons of Being a W2 Employee
Accountability: While many find a sense of purpose in being part of a larger group all working towards the same goal, the tradeoff is flexibility. You’ll be expected to show up for regularly scheduled work on time daily. At Merrick there a certain team meeting you’ll need to participate in to help us deliver our mission of a serene remodel. We also have annual performance and compensation reviews.
Guidelines and Core Values: As a team member of Merrick, you are bound to our employment guidelines and core values. You should review these documents carefully before joining the team to ensure that they align with your own personal beliefs. If they do this could be considered a pro!
Side work: Merrick covers worker’s compensation, disability, your tools and personal vehicle. In exchange we expect that you are working exclusively for us. That means no independent side work. It’s important to us that you come to work rested and ready to be part of the team.
Legal limitations: The be a W-2 employee you do need to be able to work legally in the United States. That means at a minimum you must have a green Card with the right to work. Preferably a Social Security Card and or US Passport.
Pros of Being a 1099 Independent Contractor
Time and money: What is an independent contractor? Essentially, you set your own schedule and rates. Instead of working by the hour you are now working by the job. If you don’t like a client, you can usually stop working for them when you want. Engagements can be short, long, or overlapping if you have the time and capacity for the work. You don’t have to ask permission to take time off. Many people prefer the freedom and control a 1099 contracting position brings, as they don’t have to do work that they don’t want to and aren’t necessarily bound to a 40-hour work week.
Taxes: For many a big benefit of contracting is that you can write off work-related expenses. If you have a commute, you can take a mileage deduction. Office supplies, conferences, and even a new work cell phone can be deducted. Many contractors work with accountants to ensure they take all the deductions they legally can to lower their tax burden. However Merrick’s benefits include many of the items you would have to source on your own as an independent carpenter.
Cons of Being a 1099 Contractor
Benefits: As a contractor, you won’t get employee benefits like healthcare, retirement savings accounts, and employee discounts. You don’t get paid when you don’t work — time off is unpaid.
Inconsistency: While it’s our mission to building lasting relationships, at Merrick we prioritize full-time employees over independent contractors. There is no promise of a certain number of hours, days, or years of work. In fact, legally we cannot provide all of your revenue as an independent contractor. That means you will need to build relationships with other designers and builders.
Taxes: As a contractor, you are completely responsible for income and self-employment taxes. Many contractors pay their taxes quarterly to avoid having a large financial burden at tax time. The money you receive has no deductions, so you must be disciplined at understanding how much you should keep from each paycheck and what amounts should go to taxes, insurance, and other expenses.
Legal Limitation: As an independent contractor you do not need to provide proof of your legibility to work in the US, but you do need to provide a Tax ID number. As an individual we can cover you under our workers compensation policy, but will deduct 10% from your invoices to cover this expense. This coverage does not extend to any helpers you may choose to employee. To protect yourself and any helpers it is best that you acquire both general liability insurance and a workers compensation policy.
As an independent contractor you may operate under a builder or designers licenses when you are working for them. If you want to supplement your work with Merrick by working directly with home owners you will need to acquire your own licenses.
Non-Compete and Guidelines: While an independent contractor is not an employee of Merrick, we still require all Sub-Contactors we work with to accept our Sub-Contractor Agreement. This lays out minimum insurance requirements, payment terms and a non-complete clause. Meaning you can not advertise your own business on our projects. So no personally lettered vehicles or shirts.
Organization & Paperwork: The tradeoff to independence is that you now have to keep it all organized yourself. There’s no master company schedule to let you know what must happen next, no estimate to build to. You tell yourself and your helpers where to go each day. You write your own estimates and your own invoices. For many independent contractors the time it takes to do the paperwork and keep themselves organized comes out of their personal hours as unpaid work.
Belonging: Some contractors feel left out like an outsider. You may not be automatically included in department or company messages, meetings, or events. They also have limited access to company resources such as our dump truck, scaffolding and specialty tools.
Tip: Some workers start as contractors but eventually are converted into full-time employees. Consider whether that is a path you want to take and talk with your manager about how and when that could happen.
Contractor vs. Full-Time Employee
“There’s no one-size-fits-all solution when it comes to whether you should take a W-2 or 1099 role,” said Dr. Kyle Elliott, founder, and career coach, CaffeinatedKyle.com. “I’ve personally been on both sides of the table, and each has its advantages and disadvantages. Ultimately, the decision of which one is best is a personal choice. If you like not having to worry about your benefits and perks, W-2 may be the safe choice. However, if you like autonomy and freedom, 1099 may be the better route for you.”
Keep all this in mind when deciding whether a contractor/1099 role or a full-time employee job is best for you. Find a job that fits your life and brings you both income and happiness, whether that’s being your own boss and master of your schedule as a contractor, or working as a full-time employee with benefits and PTO.
Contractor or an employee: Check your status
If you are doing the same work as a full-time employee but are working as a 1099 independent contractor, you may want to ensure you’re being classified correctly — are you truly a contractor? Some companies try to use contractors to avoid adding a full-time employee to the payroll so they don’t have to provide benefits. Check the IRS site if you’re unsure of your status.
*This article has been modified from one originally posted on Glassdoor, Contractor or employee: Pros and cons of 1099 vs. W2 – Glassdoor Blog.