When I think back to when I first started freelancing, I’m struck by how much has changed in the last ten years. Back then, freelance workers — especially remote workers — were more uncommon than they are today. Those who could hack a self-employed career seemed like the exception, and insecurity surrounding client contracts, insurance, and benefits often took the joy out of a flexible schedule.
After a few years and some great clients who taught me what a good working relationship looks like, I found that knowing your rights is essential as a 1099 worker. In fact, it can make the transition to freelancing a lot less daunting.
Here are the essential 1099 employee rights you need to know, so you can focus on nurturing your business.
Right to business management
As a freelancer, your business is your business — not anyone else’s. That's why "1099 employee" is technically a misnomer: you're not employee at all, but an independent contractor. You should always have access to the following:
- Your own intellectual property: As a freelancer, you have a right to own your work. If you agree that your work will ultimately be part of your client’s platform after your contract ends, all good! But if you are using a design, concept, or anything else you consider a core part of your services, structures are in place to protect your intellectual property, such as patents and trademark laws
- Prompt payment: You won't be on the company payroll as a 1099 worker, but you have the right to state when you expect to be paid. When drawing up a contract, ensure that a payment schedule is set (or that you agree to your client’s usual practices). If a client fails to pay on time or at all, you will be able to pursue legal action
- The ability to subcontract: If a client requires you to complete a task that's out of your wheelhouse, you reserve the right to engage subcontractors to help get the job done. This doesn’t mean you can accept a job and hire a sub to do your work for you, but rather that you can consult experts or take on additional help during a project period
In addition, a client may ask you to state that you work for them on LinkedIn or elsewhere. If the gig is long-term and they're your anchor client, that could be fine, but it’s a slippery slope.
Being asked to position yourself as an employee (publicly or otherwise) could potentially harm your ability to attract more business. Giving away too much of your hard-earned freedom can ultimately make you feel like a W-2 employee without the benefits.
Right to convenience
While most self-employed workers have the freedom to set their hours, employers sometimes do require contractors to work a certain amount of hours or days on specific projects.
Contracts with set hours aren’t unheard of, but if you’re asked to work 40 hours a week without any benefits, you may be a misclassified worker.
As a contractor, you get to decide:
- When you work: Your client can’t dictate your working hours unless otherwise agreed upon. As a freelancer, you have the right to take on multiple clients and projects, as long as you honor each client’s project requirements
- Where you work: 1099 workers can dictate their workplace standards while deciding where to work. It doesn’t matter if you feel more productive working from home or on a plane 30,000 feet in the air — as long as you get the job done. If you find a client asking you to do that, remember what I said about misclassification!
One caveat: While most independent contractors aren’t required to report to an office, there are exceptions for certain gigs. We still haven’t figured out a way to repair a leaky sink remotely, so if you’re a freelance plumber or construction worker, you’ll likely be required to be on-site in some capacity.
Right to a contract
This may seem like a no-brainer. But if you’re juggling multiple projects (been there), you might be less inclined to draw up an official written contract, especially when it’s a small job or time to pay the rent.
Take a deep breath and set aside the time to draw one up, even if you’re doing a simple one-week job. Setting guidelines helps ensure that you and your client avoid miscommunication — and that the nature of your employment relationship is clear.
Right to deduct business expenses
The IRS allows 1099 workers to write off their business expenses, so you should be taking advantage of every chance you get. For freelancers, learning what does and doesn’t count as a write-off is the first step to saving money come tax time.
Tracking these expenses used to feel laborious to me. I would start the year collecting my receipts, but by the time April rolled around, I had long abandoned my collection. Today, I have a dedicated business account linked to the Keeper, and write-offs have become a part of my weekly financial health check-in.
Here are some examples of expenses you might be able to deduct.
- 🏠 Home office deduction: As a 1099 worker, you’re entitled to write off any expense related to your home office, such as rent, home repairs, insurance, Wi-Fi, utilities, and more. There are stipulations you must uphold to qualify for the home office deduction, but if you’re working from home, you likely already meet those requirements
- 🚃 Transportation: Freelancers can deduct a variety of transportation expenses, from public transit to car repairs to mileage
- 📱 Cell phone: Most 1099 workers use a personal cell phone for work, which can also be treated as a work expense. If you use your personal cell phone for work during the morning, track those hours — you can only write off the business-use portion of your bill
- 💻 Laptop: Unless your job requires a carrier pigeon (in which case, tell us more), you’re likely using a laptop. 1099 workers can use their laptops for everything from communication to documentation, so they count as a business deduction
- ✈️ Travel: Traveling for work can be fun, but it’s important to remember that it is work, even if you’re doing it from a beach in the Bahamas! Travel expenses that you can write off can be anything from flights to hotels to business meals. As long as you are working “regular” business hours and traveling mostly for work, you can write off expenses accumulated during that time. As with most write-offs, there are rules to what you can and can’t define as a business expense, like gym memberships (for most people) and movie rentals
- Insurance: Insurance related to your business is integral to your work and can likely be written off. You’ll likely have workers comp or liability if you're a construction worker. Other types of workers, like copywriters and consultants, may have a policy that covers errors and omissions
If you’re still not sure if you qualify for the home office deduction, Keeper’s handy home office deduction quiz will help you figure out where you stand — and if you can make any adjustments in order to qualify.
Now that you understand independent contractor rights, here are a few pros and cons to help you make sure venturing out on your own is right for you.
W-2 employees vs. 1099 contractors: Pros and cons
Since 2020, the number of Americans doing contract work has increased significantly, rising from 15.8 million to 31.9 million in 2022. If you've joined their ranks, it's a good idea to get familiar with the good and the bad, so you’re prepared for whatever comes your way.
For a side-by-side look at how take-home two types of work compare, check out this 1099 vs. W-2 calculator. Otherwise, read on to get a broader sense of the pros and cons.
The pros and cons of W-2 employment
While freelancing does come with inherent freedoms, a stable paycheck, and benefits can be hard to pass up. Understanding W-2 employee benefits will help you decide what type of contract works best.
Traditional employees have their income taxes, Social Security contributions, and retirement benefits withheld by their employer, leading to fewer administrative tasks.
They’re also entitled to certain benefits from their employer, potentially including:
- Medical leave
- Overtime pay
- Unemployment benefits if they’re terminated
W-2 employees are bound by contract to work set hours. They also have little control over their working conditions.
For example, if your employer to come to the office, you have to abide by their request, even if working in person hurts your workflow.
The pros and cons of 1099 work
So you’ve gone freelance and can’t imagine commuting or waking up early ever again. While the excitement is real, it’s important to be aware of potential challenges, too.
For committed 1099 workers, the main perk of self-employment more than outweighs the potential pitfalls: You can be your own boss. The ability to control your working environment and hours is often the main reason workers go freelance.
Being self-employed today is much easier than just a few years ago. Take write-offs, for instance: Keeper automatically links to your card and categorizes write-offs by line. When it’s time to pay taxes, you can print out a spreadsheet of the year’s write-offs or file directly through the app.
Bearing full responsibility for your own taxes and retirement savings can feel like a lot to take on. In particular, not having an employer withholding taxes for you can mean having to make estimated tax payments every quarter — which means you’re worrying about taxes four times a year instead of just one. To find out if you have to pay quarterly, you can use Keeper’s free quarterly tax calculator.
Self-employed workers also have to pay for their own health insurance, which can be time-consuming and potentially stressful. Without a stable paycheck, you’re also more likely to feel ebbs and flows in your budget.
Ultimately, though, understanding the pros and cons of 1099 work and the basic protections that you’re entitled to will give you more control over your work-life balance. That way, you can grow your business on your own terms.
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At Keeper, we’re on a mission to help people overcome the complexity of taxes. We’ve provided this information for educational purposes, and it does not constitute tax, legal, or accounting advice. If you would like a tax expert to clarify it for you, feel free to sign up for Keeper. You may also email email@example.com with your questions.