I have an opportunity to work out of my home for a person who is running a marketing company out of his home.?

[kassy del]

I will be working 20-25 hours per week. He is not using a payroll company to process checks and when I received my first check, no taxes, social security, etc. is being taken out. Is this legal? And if I continue on in this capacity, am I technically "employed" in the eyes of a bank if I'm trying to re-establish myself after several years at home?

[tmweber]

I would think that he is considering you an independent contractor if no taxes and such would have been taken out.

You may need to ask him why nothing was taken out.

[Lady D]

You are employed, but will be SCREWED come tax time. He has you as basically a contractor, rather than an actual employee (IF he has you on the books at all, which would be illegal if he didn't.) Not only will you have to pay your regular taxes, but you will be responsible for Social Security, Fica, etc.

Ask him how he will handle W2's at tax time. If he says there won't be one, then no, banks don't consider you employed. If it's a 1099 you are responsible for the additional taxes in a lump sum at tax time AND banks consider you self employed. This is a high risk group of people in credit, so it while it will slightly increase your chances, you still face obstacles.

You might also want to check and see if he has a business license. If he doesn't, not only isn't YOUR job valid, but his company isn't either. If this is the case quit now. If you don't, at LEAST make sure that you don't sign ANYTHING and that your name isn't used on anything.

Also, if he doesn't have a business license, start tracking your credit report just in case. A friend of mine had something similar happen to her and her "boss" had opened accounts in her name. When she went to get a mortgage she discovered over $5000 in Fed Ex accounts she had never opened.

[doobie true]

Yes it is legal. You are contract labor. That means has not actually hired you to work for him. You work for yourself for him. You are responsible for paying your taxes and ssi just like any common business owner does. When tax time comes, he will provide you and the irs with a 1099 form and it will say how much he has paid you. Be careful and keep very good records, just like any common business owner does. Some people try to say they have paid you more than they actually did because it makes their taxes lower. A good plan is to send the irs a check about every 6 to 8 weeks for 15% of what you have made for that period of time. Send ssi a check every 4 to 6 weeks for 7% of what you have made. Then you have your state taxes. It can get to the point where you owe more to them than you are bringing in if you don't do it this way and keep putting it off.
Most contract labor that is succesful make large amounts of money. Like construction contractors and professional types like lawyers.