Absolutely. Whether you’re a freelancer, independent contractor or budding entrepreneur, you have access to an expanded range of retirement plans, including both an Individual 401(k) and a SEP IRA.

Can a 1099 employee open a Simple IRA?

SEP IRA. The simplified employee pension plan allows 1099 workers to contribute up to 25 percent of their net earnings from self-employment or $53,000, whichever is lower, in 2016. Like a traditional IRA, you are allowed to contribute to a SEP IRA up to April 15 and still claim the contributions on the prior tax year.

Does SEP IRA reduce self-employment tax?

A SEP-IRA is funded using pre-tax dollars. This can reduce the taxes you owe in specific ways. A self-employed person who contributes to SEP-IRAs for their employees boosts business expenses. This lowers net profit, reducing both the self-employment tax and the income tax.

Do you have to offer 1099 benefits to employees?

Keep in mind that the agreement between the employer and worker is just one of the factors that determine whether a worker is an actual employee. If you hire a worker as a 1099 contractor, you are not required under law to offer the contractor the same benefits you provide to your actual employees.

What are the different types of 1099 employees?

Common Types of 1099 Employees. 1099 “employees” are generally individuals who are in an independent trade, business, or profession in which they offer their services to the general public (not just a single customer or employer), including: Doctors; Dentists; Veterinarians; Real Estate Agents; Lawyers; Accountants; Contractors

What makes a 1099 employee an independent contractor?

The worker is performing a task or job that is outside the functions of the business in question. A 1099 employee is an independent contractor and there may be some benefits that make it look like a good option, but we want to caution employers to cross their t’s and dot their i’s.

What are the common mistakes with 1099 employees?

Common mistakes with 1099 Employee 1 Not having a written agreement that contractor will be independent of control. 2 Exercising too much control over independent contractor. 3 Basing classification on industry norms. 4 Failing to file Form 1099-MISC. More …