Welcome to Emergence

Welcome

You're joining Emergence as a subcontractor, not an employee. That's a real distinction with real consequences for how you get paid, how you handle taxes, and what you're responsible for. Most of this will be new if you've never worked this way before, so this guide walks through what it actually means and what to do about it.

Nothing here is complicated once you've done it once. It's just different from a regular job, and nobody explains the differences up front. This is that explanation.

Subcontractor vs. employee — what actually changes

As an employee, your employer withholds taxes from every paycheck, matches your Social Security and Medicare contributions, and usually offers benefits: health insurance, paid time off, unemployment insurance, workers' comp. In exchange, they control a lot about how you work — your hours, your tools, your process.

As a subcontractor, none of that withholding or matching happens. Emergence pays you the full amount on your invoice, no taxes taken out, and you're responsible for handling your own taxes from there. In exchange, you control how the work gets done: your schedule, your tools, your method. Emergence cares about the deliverable, not your hours.

That trade — more control, more responsibility — is the whole shape of subcontracting. Everything below is what "more responsibility" actually means in practice.

You don't need to start a business

This is the part that trips people up first. You do not need to form an LLC, register a corporation, or "start a business" in any formal sense to work as a subcontractor. The default legal status for a person doing paid work on their own, with no formal entity, is a sole proprietorship — and you're already one the moment you start doing paid work this way. No paperwork required to create it.

An LLC can make sense later for liability protection as you take on more clients or bigger contracts, but it's not a requirement, it doesn't change how you're taxed by default, and nobody should tell you it's step one. Step one is just doing the work and handling the taxes correctly, which is everything below.

The one piece of paperwork that sometimes does apply: if you plan to operate under a business name that isn't your own legal name (e.g. invoicing as "Riverside Dev Co." instead of your own name), most cities and counties require a fictitious business name filing (also called a DBA — "doing business as"). If you're just invoicing under your own name, you don't need this.

The tax basics

This is the part that actually matters most, because unlike a job, nobody is doing it for you.

No withholding. Every dollar Emergence pays you shows up in full — no federal, state, Social Security, or Medicare tax taken out. That's not a bonus. It means you owe that money later, and it's on you to set it aside.

Self-employment tax. As an employee, Social Security and Medicare together cost you 7.65% of your paycheck, and your employer quietly pays the other 7.65%. As a subcontractor, you're both sides of that — 15.3% total, called self-employment tax, on top of regular income tax. (Half of what you pay is deductible against your income tax, which softens this somewhat, but budget for the full amount up front.)

Rule of thumb: set aside 25–30% of every payment the moment it lands, into a separate savings account you don't touch. That covers self-employment tax plus income tax for most people. It feels aggressive until tax season, when it's the reason you're not scrambling.

Quarterly estimated payments. Because nothing is withheld, the IRS expects you to pay estimated tax four times a year rather than one lump sum in April — roughly mid-April, mid-June, mid-September, and mid-January (Form 1040-ES). Missing these can mean a small penalty even if you pay everything correctly by the April deadline. Most states with income tax want the same thing on their own schedule.

The paperwork trail. Emergence will ask you to fill out a Form W-9 before your first payment — it's just your name/business name and taxpayer ID, so Emergence can report what it pays you. Once the total Emergence pays you in a year crosses a threshold (historically $600), you'll get a Form 1099-NEC the following January showing what was reported to the IRS. Keep it with your tax records; it's the contractor version of a W-2.

Track your expenses. Unlike an employee, you can deduct legitimate business expenses against what you earn before you're taxed on it — a laptop, software subscriptions, a portion of your internet bill, a home office if you have a dedicated space. Keep receipts as you go. This is real money; it's the main lever you have to lower what you owe.

Practical setup checklist

• Open a separate bank account for subcontractor income (not required by law, but it makes tracking what's yours vs. what's owed to the IRS dramatically easier)
• Fill out the W-9 Emergence sends you
• Pick a system for setting aside 25–30% of each payment as it arrives
• Note the quarterly estimated tax dates somewhere you'll actually see them
• Start a simple expense log — a spreadsheet is fine
• Talk to a CPA before your first quarterly deadline if any of this is new. An hour with one now is cheaper than guessing wrong for a year.

Operating like your own business

This part isn't paperwork, it's practice, and it matters for a reason beyond taxes: it's what makes you genuinely independent rather than an employee in all but name, which is the standard both you and Emergence need this relationship to actually meet, not just say on paper.

Concretely, that means:

• Use your own equipment where practical, rather than gear Emergence provides.
• Set your own method. Emergence will tell you what needs to get built, not how to spend your day building it.
• Invoice for what you deliver, on your own schedule within the agreed terms, rather than expecting a standing paycheck.
• It's fine to work with other clients. Nothing about this engagement requires exclusivity, and having other work is actually a sign of a healthy independent contractor relationship, not a conflict.
• Keep it separate. Separate bank account, your own tools, your own hours. The more this looks like your own operation, the more it holds up as one.

What you don't get as a subcontractor

Worth saying plainly rather than discovering later: no employer-sponsored health insurance, no paid time off, no unemployment insurance if the engagement ends, no workers' comp coverage through Emergence, and no overtime rules — you're paid for the hours you invoice, full stop. If health coverage or retirement savings matter to you, that's on your own setup (a marketplace health plan, a SEP-IRA or solo 401(k) for retirement — both easy to open, worth asking a CPA about once you're earning steadily).

How this works with Emergence

• The agreement. You'll sign a subcontractor agreement covering the scope of work, payment, and an initial 90-day engagement term. Read the subcontractor agreement alongside this guide — it's the binding part; this guide is the explanation. When you're ready, request it from that page and we'll send it over to sign.
• Confidentiality. You'll also have an NDA in place separately. What you see and build stays with Emergence.
• Who owns the work. Anything you build for Emergence belongs to Emergence — that's standard for this kind of engagement and it's spelled out in the agreement.
• The 90-day term. Engagements start with a defined term rather than running open-ended. At the end of it, either side can propose renewing it, ending it, or — separately, if it's a mutual fit — talking about something longer-term. None of that is decided in advance; the term is just a natural checkpoint.
• Schedule. Emergence cares about the work getting done well, not the hours it took. Set your own schedule.
• Getting paid. Invoice monthly. Emergence pays undisputed invoices within 15 days (Net 15).
• Questions. Reach out to Sarah (sarah@emergence.us) with anything about scope, invoices, or the agreement itself.

This guide is general education about how subcontracting typically works under U.S. federal tax rules and California practice. It isn't personalized tax or legal advice, and it doesn't cover every situation. Talk to a CPA about your specific numbers, and to an attorney if anything in the agreement itself is unclear.