Let's talk about 1099's and contractors

[daniel@procarpet]

I don't know why this is confusing to me. I have always thought in order to classify a worker as a contractor they had to be in business for themselves or work for another company, use their own tools, and do the job as they see fit.

Well that is not the case. A local towing company supplies the truck, equipment, and work while the driver provides the labor. They are paid a percentage and 1099'd. My customer yesterday owns a pressure washing company and has a great account. They pressure wash big rigs at 25 dollars a pop. He has a big hot water pressure washer. He said every Saturday they clean around 60 trucks. He said there are a lot of lowballers as in carpet cleaning that will do them for 5 dollars etc. :roll: He pays his employees a percentage (20-30 percent) and 1099's them.

Another local carpet cleaner provides a portable, the chems, and the work while they provide the labor and use their own vehicle. They don't have a business license or insurance. They are paid 45 percent and 1099'd. So why would anyone that pays an employee a percentage not 1099 them?

 

[FB7777]

Business owners do a lot of things, not all of them may be considered legitimate.

Where I live, you just outlined situations of employees being improperly classified so the business owner can save a buck

at least for now....



Consult with your CPA regarding this issue

 

[Ryan]

Didn't UPS get into a lot of trouble for doing things like this?


I think every large VCT company in the world does it though lol. There must be a legal way to do it.

 

[joe harper]

Fred is giving you good advice..!!!!

However ..."There is more than ONE way to SKIN a cat.."....LEGALLY... !gotcha!

For EXAMPLE..."I" retired ...Not by SELLING my company... :shock:

My CPA...suggested that I just LEASE my Equipment to my SON....PeRpEcTiAl IncOmE.. 8)

My son pays me a Monthly amount of $$$$$.$$..per month.. :idea:

 

[FB7777]

I like that Joe 8)

thats why you pay good money for CPAs...creative tax avoidance

1099s for employees is tax evasion

 

[daniel@procarpet]

The point I am making is I have seen numerous instances where a buisness subcontracts only the labor. They own the equipment and tools. I am sure plumbing companies could do this as well.

 

[Charlie Lyman]

Didn't UPS get into a lot of trouble for doing things like this?


I think every large VCT company in the world does it though lol. There must be a legal way to do it.

Fed Ex did.

 

[dgardner]

The point I am making is I have seen numerous instances where a buisness subcontracts only the labor. They own the equipment and tools. I am sure plumbing companies could do this as well.

Just because you see it done does not necessarily make il legal, nor does it guarantee the IRS will not eventually catch them and reclassify subs as employees...

 

[daniel@procarpet]

If my accountant says it is ok and backs his work, I am fine with it. If the irs ever came back on me, I would let my accountant handle the situation.

There are several companies here that do on average a hundred houses per day that supply the work, machine, and chems. The employee provides the labor and vehicle. They get 45 percent and do their own taxes. Like I said it is a little confusing. The guy I am referencing told me he has been audited a few times and the irs said he could have 6 but no more than that number of contractors for his business the way he is classifying them.

 

[joe harper]

The only reason ..that I do NOT care for Salary or Hourly labor...is because of
production and quality of personal you will ATTRACT....Not the TAXES you have
PAY...!!!!

I LIKE having a "FIXED COST"...on my labor.. :idea: Is there "ONE" owner on this
Board that would clean carpet's "BY THE HOUR"... :?:

That is why you VENTURED out on YOUR own...to begin with.... :!:

Soooo.... why would you ask an EMPLOYEE to slave to make you RICH... :roll:
And ...you wonder WHY you can't keep GOOD help.. :shock: If they are worth
a S#!t....They will end -up being your "ComPeditoR".....

If you DON'T ..get professional ADVICE from a CPA....."YOU CAN GET KILLED"
Always have "Good Advise"...CYA...and be LEGAL...!

There are "many ways to STRUCTURE PAY"....just know what you are DOING... :!:

 

[joe harper]

If my accountant says it is ok and backs his work, I am fine with it. If the irs ever came back on me, I would let my accountant handle the situation.

There are several companies here that do on average a hundred houses per day that supply the work, machine, and chems. The employee provides the labor and vehicle. They get 45 percent and do their own taxes. Like I said it is a little confusing. The guy I am referencing told me he has been audited a few times and the irs said he could have 6 but no more than that number of contractors for his business the way he is classifying them.

You have OBVIOUSLY...never been audited... :roll:

Your CPA can ADVISE you on the LAW...
However ...he is ONLY responsable for the NUMBERS you provide him... :shock:

He won't be bringing you "cigaretts" in jail... :idea:

 

[John Watson]

If I remember this correctly,To qualify as a sub-contractor he has to have his own ins, lienses, etc.. He can only work a certain percentage of his time for one contractor, must have more than one 1099, must control his own schedule. If not and you are audited you could be liable not only for yourshare of his taxes but his also. This was a big issue with carpet installers a few years back..He can use your tools and equipment, but has to be a lagit buisness not an employee.

 

[joe harper]

If I remember this correctly,To qualify as a sub-contractor he has to have his own ins, lienses, etc.. He can only work a certain percentage of his time for one contractor, must have more than one 1099, must control his own schedule. If not and you are audited you could be liable not only for yourshare of his taxes but his also. This was a big issue with carpet installers a few years back..He can use your tools and equipment, but has to be a lagit buisness not an employee.

YOU are exactly CORRECT....!!!!!!!!!!!!!!

I was audited when I had my Flooring STORE..."I was allow to SnEEk-By".....
Only because I paid the Installers a weekly DRAW...Paying the Proper Taxes...
Then ISSUING them a 1099...for the BONUSES... !gotcha!

ONE guy FAILED to report his 1099 income... :shock: But it was ALL on HIM...!!!
very similar to a waitress...NOT reporting her "TIPS"....


ps The state of FLORIDA...allows for the WAIVER of workmans compensation...
So W. Comp....was NOT an Issue.. :idea:

 

[Brian R]

Fred is giving you good advice..!!!!

However ..."There is more than ONE way to SKIN a cat.."....LEGALLY... !gotcha!

For EXAMPLE..."I" retired ...Not by SELLING my company... :shock:

My CPA...suggested that I just LEASE my Equipment to my SON....PeRpEcTiAl IncOmE.. 8)

My son pays me a Monthly amount of $$$$$.$$..per month.. :idea:

Too bad your computer wan't part of the deal. shiteatinggrin 8)

Some companies will lease or finance the equipment to the tech. The Tech should have his own license and insurance.

It's hard for a guy to jump into a carpet cleaning business because of the expenses. If the larger company can help him out with that by "giving" him the set up and letting him make payments, I see no harm in that.

It's when they only pay them 20 or 30% that really hurts.

 

[joe harper]

WTF........... :!:

did you just say ...20 to 30 % was NOT ENOUGH for the SUB... :shock:

You ASS RAPE your iLLeGaLs...for 50%... :shock:

ps I bought a NEW pUtEr.... :mrgreen:

 

[Brian R]

WTF........... :!:

did you just say ...20 to 30 % was NOT ENOUGH for the SUB... :shock:

You ASS RAPE your iLLeGaLs...for 50%... :shock:

ps I bought a NEW pUtEr.... :mrgreen:

NO 20 To 30% isn't enough if he is paying for his own equipment and all that.