You found your own 1099 contract. Now what?

You are offered a direct contract by a manager but the company wants you to have an Employer of Record (W-2) or an Agency of Record (Sole proprietorship/1099 or Incorporated) relationship with them.

Now what?

To use an Employer of Record:
You have a few choices:

  • Go back to the agency you used for your last contract
  • Use the agency recommended by the manager
  • Use a friend’s agency
  • Use a Passthru Company

Most agencies markup 30% to 60%, regardless of whether you or the agency initiated your placement. An agency will ask you to sign a contract that contains exclusivity clauses. These clauses mean that you are bound for the length of the contract and possibly for a year afterwards. The contract is likely to include a buy-out fee in case the company wishes later to hire you as an employee.

When you use Chancellor & Chancellor, Inc. as the Employer of Record, you control contractual restrictions.
Passthru contracts:

  • Contain no restrictions.
  • Put a lot more money into your pocket with guaranteed lower costs.

So naturally, you tell the manager that you would like Chancellor & Chancellor, Inc. to become your Employer of Record.

Some companies limit their use of agencies. In this case, you may be asked to negotiate the contract with an agency from ‘The approved vendor list. This means that you are going to pay that agency a substantial commission for the privilege of servicing the contract you found! It also means that you will have to spend time negotiating terms and playing one agency against the other, hoping that you get the best deal you can under the circumstances.

Knowing that Chancellor & Chancellor, Inc. charges less, so that you can make more, you can then tell your manager that you would still prefer to have Chancellor represent you.

Even though Chancellor is not on the approved vendor list, most managers can ask for an exception. You explain that Chancellor is not a placement agency but a Tax Compliance and Payrolling Service. Therefore, Chancellor is an alternate choice for contractors who are not bound in a contract with an agency. This means that it will not cost the client more BUT you will receive more money for a contract with Chancellor than through a traditional broker.

Get your manager involved. Try to have him/her call Chancellor and discuss how we can help.

To set up the contract, call Anthony H. Goeree in CA 1-415-332-(zero) (one) (two) (three) or send an e-mail to anthony (at) chancellor (dot) com<. Chancellor will sign an Agreement with the company specifying your services and in turn sign an Employment Contract with you.

To use an Agency of Record:
Should your client prefer that, as an incorporated contractor, sole proprietorship(1099), you do your billing through a 3rd party, Chancellor can act as the Agency of Record for you and bill the client net 30 days.

We will actively collect invoices older than 30 days because you want to get paid and we want you happy. That is our business.

You get your money as quickly as possible and without having to follow up on your invoices and your check. This alone makes Chancellor worth it.

Even if you could develop a direct vendor relationship with the company, many times their insurance requirements are so high that it is beneficial to bill through Chancellor. Check it out.

To set up the contract, call Anthony H. Goeree in CA 1-415-332- (zero) (one) (two) (three) or send an e-mail to anthony (at) chancellor (dot) com. Chancellor will sign a Vendor Contract with the company specifying your services and in turn sign a Personal Services Contract with you.