Self employed

Hi griffy,

There are rules that determine if a person providing service is an employee (W-2) or independent contractor (1099-NEC or 1099-Misc). In general, the degree of control from an employer - what will be done and how it will be done. Please refer to below IRS link.

https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-o...

Once determined,

(1) from the business owner's perspective - Independent contractor:  less payroll related administrative work, such as payroll reporting, payroll deposits, an employer does not pay half of the payroll related taxes, benefits and insurance etc. 

(2) from the perspective of employee or independent contractor: W-2 employee - easy tax filing. Independent contractor fills out Schedule C Profit (Loss) from Business, can deduct business expenses and others. Net income is subject to income tax, self employment tax. In general, net business loss can offset other type of income.

The Difference Between a 1099 and a W-2 Tax Form

https://turbotax.intuit.com/tax-tips/irs-tax-forms/the-difference-between-a-1099-and-a-w-2-tax-form/...

Depending what type of loans, finance companies have different requirements.  W-2s are in general more easily verifiable, whereas 1099s and Schedule C have more self-reporting elements, may in turn require more verification.

Hope this helps. Thank you.