Working for recruiter on W-2 vs. working for client on 1099?
I don't think anyone can give you a definitive answer without knowing all about your situation, but some things to consider: If you are on a 1099, you have to pay self-employment tax, while on a W-2 you do not. That is, social security tax is 12.4% of your income. If you're a 1099, you pay the full 12.4%. If you're W-2, you pay 6.2% and the employer pays 6.2%. So if they offer you the same nominal rate of pay, you're 6.2% better off with the W-2. What sort of insurance could you get privately and what would it cost you? I have no idea what the going rates for insurance are in California. If you're all in generally good health, you might want to consider a high-deductible policy. Then if no one gets seriously sick you've saved a bunch of money on premiums. If someone does get sick you might still pay less paying the deductible than you would have paid on higher premiums. I won't go into further details as that's getting off into another question. Even if the benefits are poor, if there are any benefits at all it can be better than nothing. The only advantage I see to going with a 1099 is that if you are legally an independent contractor, then all your business expenses are deductible, while if you are an employee, there are sharp limits on deducting employee business expenses. Maybe others can think of other advantages. If there is some reason to go the 1099 route, I understand that setting up an LLC is not that hard. I've never done it, but I briefly looked into it once and it appeared to basically be a matter of filling out a form and paying a modest fee. The tax savings of being 1099 can be significant.  It depends on your salary, and what you can deduct.  You may want to consult with an accountant.   The social security tax, for the self employed, is 12.4% of profit not on revenue.  If you can write off more than half of the income as expenses then you could be paying less than a w-2 employee. Also you might make a higher salary as a 1099, it is rare the offer the same compensation for a W-2 as a 1099 as the former has higher expenses for the employer. It is hard to know without actual numbers, actual expected expense deductions and so forth.  Which is why I would suggest consulting with an accountant.  You may want to talk to one in the state where he will be working rather than where you live now.
You can ask the client to pay you through the LLC. In that case you should invoice them from the LLC and have them pay the invoice. If they pay you personally, you can always make a capital contribution to the LLC and use that money to buy equipment. The tax implications for a single person LLC providing professional services are the same for you either way: income is income whether it's from your LLC or an employer. It's different for the employer if they are giving you a W2 vs a 1099. So it doesn't matter much for you. If the LLC is buying equipment, make sure you get enough revenue through the LLC to at least offset those expenses. The key to getting a job in college and for the rest of your life is networking and knowing exactly where you want to work not a business card.  During a career fair, recruiters get flocked hundreds of students who don't know shit about the company or industry.  All you need to do is research the company and figure out what makes it better than it's competitors. Then when you talk to a recruiter at the fair, be sure to slip it into the conversation.  Recruiters are looking for people who fit the companies culture. Make sure you structure your elevator pitch in a way that aligns with it perfectly.  If you do these things, I guarantee you will get an interview assuming you have the minimum GPA "Not arguing w that at all, and you can't colo w IB afaik. Their API over WAN, VPN or CTCI on direct line only. If you colo at Nasdaq and clear through Lightspeed you're talking microseconds (which is where my actual low latency strats are). But yes, I suppose for IB I should have mentioned ""low-ish"" latency rather than actual low latency. So I'll add a caveat to the newbs - don't try to do ECN arb (or any other super-low-latency strat) or market-make (their cancel fees will kill you) the entire equity universe through IB. It won't work. They're not suitable for that.  My 50-100 reference was for WAN IB clearing for these guys probably using their API through IB gateway or TWS, which is how most would likely start. Doubt they're diving head first into ECN arb day one - they probably wouldn't be doing lowest latency stuff, most peeps start w some sort of trend following strat in my exp and you can work on those timescales w those. Trying to give advice for people starting out, not for other already pro algo traders.  But yes, finprogger is correct, IB would not be a suitable broker to use for a competitive ultra low-latency strat. They are too slow." "Here's an alternative. There are hundreds, maybe thousands, of contract engineering firms (""job shops"") in the United States, probably hundreds in California alone.  They are in the business of doing what your ""employer"" wants you to do, they know how to do it, they have been doing it for decades, working with the biggest, most-established companies in the country.  They have forgotten more about providing engineering services to clients, and paying the engineers, than you can learn in a lifetime. Call a few of them.  Set up meetings.  Budget a few hours for it.  You want to talk with the most experienced recruiter in the office, the Old Guy Who Has Been There And Done That.  Explain your situation, and tell them that, rather than go through all of the headaches yourself, you want to investigate the possibility of THEM handling all the headaches, for their usual markup of course.  (You can probably word this better than I can, but you get the idea.) The shop may or may not be willing to talk about their markup.  My personal opinion is that this is perfectly OK.  What they make off of you, after your rate is paid, is THEIR business. Also, talk about what you do, and your recommended rate.  It would not surprise me to learn that you are currently grossly underpaid. AND, mention that, if the client declines, you're going to be available immediately, and you'd certainly be open to working with them.  (You will see this again.)  In fact, if they have any current leads that you fit, you would certainly be interested in hearing about them.  (They may already have a req from another client, for which you fit, for which the client is willing to pay much more than your current ""employer"".) If it were me, personally, I'd start with Yoh, Belcan, and maybe TAD Technical.  These are three of the oldest and best. I'd also hit up CE Weekly, get a subscription, and find some other shops with offices in your area. Once you have a shop lined up, then ask your ""employer"" if, rather than you setting up a personal corporation, they'd be willing to work with an established Contract Engineering firm,  who does this kind of thing for a living, who does this every day, who has been doing this for decades.  Doing this is simpler for everyone, and, by going through an established firm, they avoid having to teach you how to do business with them.  They also avoid the risk of having you reclassified by IRS as an employee, which exposes them to all kinds of legal and financial liability. If they say ""No"", WALK AWAY FROM THEM.  Immediately.  They've just thrown up a HUGE red flag.  This is where the other discussions with the shop come into play." More than likely you have signed an NDA with your employer with a non-compete clause within it. From what I have seen this clause would be in place for two years following the date you left your firm. So, leaving your firm and consulting as a 1099 for your current client is more than likely a violation of your NDA for 2 years or some period of time. With that being said, there is nothing keeping you from going off on your own as an independent and finding work, so long as that work isn't from one of the current clients of your firm.   I am not a lawyer and everything above is what I have seen in my personal experience. All of this assumes that this relationship isn't as employer-employee relationship, which would require you to withhold taxes. If you send them a small token of appreciation, and you are unable to record it as a business expense, or some other deductible expense, you don't have to be concerned about how they claim it. They decide if they want to risk claiming it was a gift, or if they want to record it as an expense. Even if you say some magic phrase that you think will impress the IRS, the recipient can still decide declare it as income. To have any hope of being able to treat it as a gift they would have to be able to demonstrate that there is a non-business relationship.  If you can claim it as a business expense, or a deductible expense,  they will have to also claim it as income; because your documentation could point the IRS to their lack of documentation.  Giving them a check or sending the payment electronically will require them to claim it as an income, since an audit could require them to explain every line on their bank statements. I did this for the last tax year so hopefully I can help you. You should get a 1099-B (around the same time you're getting your W-2(s)) from the trustee (whichever company facilitates the ESPP) that has all the information you need to file. You'll fill out a Schedule D and (probably) a Form 8949 to describe the capital gains and/or losses from your sale(s). It's no different than if you had bought and sold stock with any brokerage. This is pretty normal.   I am in the UK and currently doing the exact same thing.  As some answers state there is additional tax law called IR35. But thats all it is, an additional tax law that may be applicable to your situation (it very well may not). It is all perfectly legal and common (all my university friends now do it). You will be the director of a company, and invoice the recruiters company.  This has benefits and disadvantages. Personally I love it, but each to their own. Don't do it if you don't want to.