Discussion:Im so tired of this subject-Employee or Contractor
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| Revision as of 04:56, 3 April 2008 Mscash (Talk | contribs) (In my state, Cal) ← Previous diff |
Revision as of 22:07, 4 April 2008 Vickytown (Talk | contribs) (I just had a cli) Next diff → |
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| {{ForumReplyPost|UserID=Mscash|Date=3 April 2008|Text=In my state, California, a person must have a state issued contractors license before they contract for jobs WORTH more than $500. This means $250 labor plus $250 materials equals a job worth $500. A handy man does not need a contractors license, a brick layer who building a wall does. Contracting without a license is a crime. This effectively nails the employer-employee relationship down. How close to the mark does this come where you are? }} | {{ForumReplyPost|UserID=Mscash|Date=3 April 2008|Text=In my state, California, a person must have a state issued contractors license before they contract for jobs WORTH more than $500. This means $250 labor plus $250 materials equals a job worth $500. A handy man does not need a contractors license, a brick layer who building a wall does. Contracting without a license is a crime. This effectively nails the employer-employee relationship down. How close to the mark does this come where you are? }} | ||
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| + | {{ForumReplyPost|UserID=Vickytown|Date=4 April 2008|Text=I just had a client audited by the Virginia Employment Commission specifically regarding the employee v subcontractor issue. (Va has a state unemployment tax similar to the federal tax). If this is any help at all he wanted my client to furnish the following documents to establish an independent contractor status: a business license; certificate of insurance; and copy of some form of advertising.}} | ||
Revision as of 22:07, 4 April 2008
Discussion Forum Index --> Advanced Tax Questions --> Im so tired of this subject-Employee or Contractor
Discussion Forum Index --> Tax Questions --> Im so tired of this subject-Employee or Contractor
| 2 April 2008 | |
| I know this horse has been beaten to death, but..... I would like to see some comments on employee vs contractor. As we are almost through another tax season, has anyone implemented (or changed) their company policy in regards to emp/contractor?
I have a new client who is a brick/block mason. He wants me to do his monthly accounting. He has 3 men who are contractors-in his opinion. He has signed contracts with these men indicating they would be responsible for their own taxes. He says they can work for others if they want-but they dont. They only take the jobs they want. But, they have time sheets. They are paid by the hour. Client says that is the best way to split the $. I have been in this business for 21 years. I used to give the client a lecture and let them decide. Then I would put a big note in the file saying "I told them and they didnt listen". My thoughts were as long as I did the 1099s, I did the best I could do. Now the IRS has me scared to death on this. Any advice? | |
| 2 April 2008 | |
| "...signed contracts indicating they would be responsible for their own taxes." Where did he get the contracts, from an experienced small business lawyer? A good contract in this situation requires a little thought. There are some independent contractor agreements on the web, but many times, they will goof in filling it in somehow.
Be far better to have them bid the job. Or, if they were long time IC's, agree that the IC would bill your client. Get invoices from these independents. It all boils down to time, place, and manner. Does your client control the time, place and manner of the work? Another quickie (unofficial) rule of thumb I use is: how long is this expected to go on? One, two projects a year? Or is this a continuing, year to year, project after project deal. | |
Chris2lane (talk|edits) said: | 2 April 2008 |
| Do these ICs carry their own insurance (WC ins. and GL ins.), their own work trucks, their own tools, their own business cards? These would indicate that they are truly in business, not just "employees". | |
| 2 April 2008 | |
| I am already leaning toward them being employees. My question is more related to how to handle the client. I hate to turn down a new client. Is it ok to just do the 1099s as client has done in the past? Even though I explained the consequences to him and he still wont do payroll, would I be held responsible? Has anyone decided to refuse any clients that should have payroll but do 1099s instead? If you have a lot of contractors (like me), this could be a costly decision. One the other had, if we are held responsible, that could be more costly. If there is anyone else having this dilemma? | |
| 2 April 2008 | |
| If all employers are ever mandated to provide heath insurance - you will see the number of contractors grow dramatically. | |
| April 2, 2008 | |
| With all due respect to the legal beagles, the contracts are meaningless in this situation. Meaningless. All that matters is the relationship. OK, the contract is one point of 20 in establishing the relationship, but the contract does NOT establish the relationship. Show the client the SS8 and ask him to take an honest look. And if he wants them independent, then help him establish an honest, independent relationship. Show him both ends of the beam so that he can see that what he's doing don't fly. | |
| 2 April 2008 | |
| Chris2lane-ICs have their own truck and tools. No business cards or business licenses. My client pays w/c on them.
JR1-I like your suggestion. Thanks! | |
Scottycoyote (talk|edits) said: | 2 April 2008 |
| i agree with jr..........the legal contracts mean zilch if its an employer/employee relationship the contract doesnt change that. I have quite a few contractors as well, I go over it with them if they truly want to get to the bottom of it and do the right thing. If they dont, i give them the information and leave it up to them to make the determination. I put some notes in their file to show it was discussed and thats it. If they make the determination and give me the info to file the 1099's, i dont see how i could be held responsible. | |
| 2 April 2008 | |
| I agree that a contract done poorly is useless. For instance, I have a good idea of what TaxRide's client put together: it will actually make it worse for him!
The truth is, the guy is probably not gonna pay a lawyer to do one, and might I add, not just prepare the paper, but also counsel the guy. However, I think a well drafted one, where the parties mean what they say in the agreement, can be of value. | |
| 2 April 2008 | |
| TaxRide: as far as what to do? Run this post off, and hand it to him. "Hey, it's not just me, see.." | |
| April 2, 2008 | |
| I also have, not as often as I should have, had the biz owner introduce me to the contractors in order to handle their taxes. They need it so that there are no year end surprises after they spent all the money. | |
| 2 April 2008 | |
| Hi, What if I was given a 1099 but I wasn't a contractor. I worked a few boat shows for this company while still working for another boating store. I was never technically trained by the company and never signed a contract for them. I just was having fun and traveling with them. I've kind of just left my taxes undone as of now because the 1099 totally threw me for a loop. When ever I plug in my data it says congrats your a business. Any help would be great I am so confused. And, I hate to admit that I actually graduated with a degree in accounting. But, this is however my first year not having my mom do my taxes. | |
| April 2, 2008 | |
| Well, what you did was not employment, and therefore self employment...unless it was really sporadic and not something you'll ever do again, in which case you might have a case to avoid the SE tax. But you can take travel expenses to/from the shows, expenses there, any other costs involved, as deductions against the 1099. | |
| April 2, 2008 | |
| Taxride says the client pays W/C on these "I/Cs." Why would client pay W/C if they're not employees? I have a client who recently completed their annual W/C questionnaire. One of the questions was about I/Cs. I told the bookkeeper to make sure that its clear that they should NOT pay W/C on I/Cs because they are not employees.
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| April 2, 2008 | |
| Some states, like IL, require WC to be paid unless the IC produces a certificate of their own. | |
| April 2, 2008 | |
| Thanks for that information JR. I wasn't aware of that. Even so, I would think that if a company hired I/Cs, they would want the I/Cs to pay for their own W/C. | |
| 2 April 2008 | |
| These people are clearly employees. Their activities are directed and controlled by the client. In a prior life I was an insurance agent and dealt with WC and GL issues. Our auditors would field audit these people and anyone who was classified as an independent contractor had to show proof of WC or they were added to the payroll and charged the premium based upon the classification of the employee.Client is just trying to avoid responsibility and save money. How fair is it for this client to go out to bid a job against someone else who is playing by the rules!!!! | |
| 3 April 2008 | |
| Yes Natalie, but in your case, you keep the time sheets. Here, I think what is meant is that the putative "employer" keeps the time sheet.... as would normally be done for employees. I don't know, just guessing.
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| 3 April 2008 | |
| Yes Natalie, but in your case, you keep the time sheets. Here, I think what is meant is that the putative "employer" keeps the time sheet.... as would normally be done for employees. I don't know, just guessing.
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| 3 April 2008 | |
| In my state, California, a person must have a state issued contractors license before they contract for jobs WORTH more than $500. This means $250 labor plus $250 materials equals a job worth $500. A handy man does not need a contractors license, a brick layer who building a wall does. Contracting without a license is a crime. This effectively nails the employer-employee relationship down. How close to the mark does this come where you are? | |
| 4 April 2008 | |
| I just had a client audited by the Virginia Employment Commission specifically regarding the employee v subcontractor issue. (Va has a state unemployment tax similar to the federal tax). If this is any help at all he wanted my client to furnish the following documents to establish an independent contractor status: a business license; certificate of insurance; and copy of some form of advertising. | |
