Question about TA 1099 form or own agency

[cruiseorbust]

Just wondering if this is worth it? I have cruised for years and have recently been asked to become an outside agent (working for a company on 1099 status). Has anyone done this before? Does it have any benefits compared to having my own business? Not sure how it will work out in the end, especially since we would be splitting commission (which by the way is not all that much money).

 

Appreciate any help in this matter, Thanks

[Iamboatman]

Well there is a whole can of worms to be opened!!:D

 

As a TA I would suggest you start out - provided no investment is requested of you (and that is a big thing!!!) - as an outside agent to see if you really like it, if it really fits your lifestyle and if you can attracted business. You will also have to take some courses and have enough experience to obtain a CLIA membership of your own. Then, and only, then should you try to get out there on your own.

 

There are many people every year that are attracted to the TA business because of the possibility of reduced rate cruises. I am confident you will find if that is your goal, finding a good TA to purchase your cruises through will be a less expensive endeavor.

 

Good Luck:)

[ocngypz]

Well, there are many considerations such as do they charge for the various GDS systems? Do you get leads? You won't get an IATAN card until you have sales over a certain amount.

 

Is training provided?

 

What about billing and collections? Are you responsible for that?

 

Do you have customer service support?

 

If you are going to do this just to get ta rates on cruises, there are very few ta rates out there.. and most of the time they are for cruises you don't really want to take. Likewise, if there are seminars, or free cabins up for grabs (courtesy of the key account managers but you still pay taxes).. they generally go to the full time inside agents.

 

Then there is Errors and Omissions insurance. Would you be covered under the agency or would you have to get your own.

 

In today's competitive evironment, billing over $1.000,000.00 will only net you about $30,000 gross. Then you have to pay your overhead, taxes, social security, etc. And that is working more than full time.

 

Most successful outside agents I know started inside so they would have a daily hands-on learning experience... and there is a lot to learn.. and the rules change every day!

[Iamboatman]

Very well put.

 

One point. I did not start inside, but as an outside, agent. It worked for me, but I can't say that it is the best for most.

[Gypsea]

I'm an outside too. I started outside but was well versed in cruising (like you) and had been booking for my ridiculously large family as well as myself. Researching on-line was a favorite pastime for me. I have a service business where I see about 40-60 people in a week so I had a customer base.

If your host company does provide leads they will be helpful but basically you will get the scraps from the table. A companies first concern has to be the inside agents and they will come first regarding leads if any are forthcoming.

In the beginning the agency I worked for provided leads so I had a couple years of sales before losing that advantage. This provided some repeaters but any agent will tell you it takes years to build a clientele in the travel business. It is still not my main income source but I travel three or four times a year lately partly due to the agent perks. This year I am on-line with an internet site of my own. Soon people can book on-line through it. This could work for you but it isn't cheap. There is a few thousand $'s investment involved to set up the site and then you have the marketing aspect which I am investigating.

You may have opportunities to cruise for less money on rare occassions but they will not be when you desperately want to travel, during holidays, summer or (school)vacation weeks. These opportunities will be more numerous if you are with a large agency. They are (almost) never FREE as ocngypz said.

The reason I can sell is because I absolutely love to cruise. It is not a job for me to learn ship information, cruise line policies, insurance details, transportation schedules. If you are truly interested it comes easy. Just don't do it if they want you to plunk down a good size sum of cash. I lucked out when I found my agency and had to pay a few dollars monthly to use the software. They made it simple for me to start but I really wanted to sell. My customers see me traveling (what seems to them like all the time) and that creates interest. After a few years I am finally developing a local clientele. I am on a busy road for our corner of the world so 8000 or more cars a day pass my office.

 

As for the CLIA cert. you don't need that if you are with a host. I never took any courses but have strong support from several wonderful, intelligent women within the agency that were always there when I needed help.

 

Good luck if you jump in. You can do it!

[cruiseorbust]

Thanks everyone for the info.

 

Just wondering, if I work as an outside agent and receive a 1099, do I need to have my own business name or tax purposes? If I don't make much (under $1000) the first year, is it better to just add this amount to my husband's regular income statement, or still file under a business? The cruise stuff is easy to me since we have cruised for years and I have help numerous people, as well as set up my own travel in the past (I would just send it to a lucky travel agent before after it was set up). The hard part for me is figuring out the tax info, since I am getting a 1099.

 

Thanks for any extra help in advance

[Dick in Falls Church]

If you get a 1099 for under $1000, and are actively trying to operate a business, you are likely to show a significant LOSS for the year.

Properly documented, this loss can be deducted and will offset part of your husband's income (assuming you file jointly).

 

The best tax treatment info I've seen for individuals with their own business of this type (be it real estate, insurance, multi-level sales, etc) is put out by a fellow named Sanford Botkin. His sessions last all day, cost about $3000 or se each--but I've been able to find the tapes & workbook on ebay for a lot less.

Sandy is a CPA, tax lawyer, and former IRS agent. Very informative.

 

Good luck.

[ocngypz]

For $1000 gross income, it isn't worth the hassle.

 

The number one question to ask, is how much is your time worth to you? In dollars and cents?

 

It could be easier for you just to work as a referral agent.. fewer headaches.. but less commission.

[Sky Sweet]

I have never worked in the travel industry, but owned a different type of business for many years before I retired. If you own your own business you can either incorporate it with its own tax ID, or file a DBA (Doing Business As) for the name of your company. In the latter case, you and your business are the same tax and legal entity, so you have the potential of being personally sued for a business related issue. Therefore, it is very important to have an appropriate business insurance policy to protect yourself.

 

Aside from what has been mentioned previously on this thread, there is another advantage of being a DBA when you work out of your house. If there is a room or two in your home that is only used for your business, that percentage of space (square footage rooms used for business/square footage house or number rooms for business/number of rooms for house) can be applied to all your housing related bills and be considered a business expense. This includes fuel oil, electricity, cleaning services, etc. Keep in mind you can only utilize this tax deduction if you do not have an office ouside the home, or do the majority of your work at your home office.

 

If you are collecting income from multiple clients this isn't an issue, but if you are receiving all of your income from just one client be sure that you meet the requirements of an independent contractor who gets a 1099 vs an employee who should receive a W-2. IRS has very specific guidelines about independent contractors vs employees. In my case it was a non issues because my clients, who paid me directly, included many different banks, lawyers, municipal agencies, and corporations.

[Iamboatman]

I don't think giving tax advise on this board is a great idea. However, there is nothing fancy or special about receiving a 1099 under your name and putting the income on your joint tax return.

 

I think the main point from the TAs is that you need to love the business and be willing to put some real hours and more into it before making the decision to get involved. If you book a couple or three cruises a year it is a good start to having some knowledge, but there is so much more to know. Don't do it for the prospect of cheap travel. Too many have made that mistake.

 

(BTW, if you work as an outside agent you will not need a CLIA membership; you work off of the agency's. When you go it on your own you will need one.)

[Sky Sweet]

I don't think giving tax advise on this board is a great idea. However, there is nothing fancy or special about receiving a 1099 under your name and putting the income on your joint tax return.

 

I think the main point from the TAs is that you need to love the business and be willing to put some real hours and more into it before making the decision to get involved. If you book a couple or three cruises a year it is a good start to having some knowledge, but there is so much more to know. Don't do it for the prospect of cheap travel. Too many have made that mistake.

 

(BTW, if you work as an outside agent you will not need a CLIA membership; you work off of the agency's. When you go it on your own you will need one.)

 

I agree that it is not a good idea to give tax advice on this board, but I wanted to alert the OP to the fact that IRS has very specific guidelines about being an independent contractor who receives a 1099 vs an employee. and there can be serious consequences if IRS determines that an independent contractor is really an employee by their standards.

[Iamboatman]

No offense was meant. I just saw all the comments (not necessarily yours) and thought a word of caution was worth making. You did make a good point.

[smeyer418]

I agree that it is not a good idea to give tax advice on this board, but I wanted to alert the OP to the fact that IRS has very specific guidelines about being an independent contractor who receives a 1099 vs an employee. and there can be serious consequences if IRS determines that an independent contractor is really an employee by their standards.

 

not for the employee/ic only the employer has a problem. Most of the tax advice above is not correct. as an example the home office exception. The IRS has a whole booklet on this. So get you tax advice from an expert...

[Sky Sweet]

not for the employee/ic only the employer has a problem. Most of the tax advice above is not correct. as an example the home office exception. The IRS has a whole booklet on this. So get you tax advice from an expert...

 

Since I am retired, I no longer keep apprised of current tax laws that pertain to people who are self employed, but I do know that was the case when I was still working because my attorney and CPA kept me updated at that time. Tax laws are consistently changing and are frequently ambiguous, so I agree that everyone should get their tax advice from an expert. However, unless things have changed radically since I retired, there are tax advantages to being self employed if your spouse has a substantial income.