Paying freinds/ use 1099misc form?

[eggy]

Well I thought I would post here and in the buisness forum, My question is I have several freinds all who work full time elsewhere, and help me out from time to time on jobs. This year they all will make over 600.00 but really no one will make over $3000.00 can I just use a 1099misc form on them and let them be responsiable for their own taxes..they do work independent really,..so????

[bob]

I ask my accountant the same question. He said that because they are working directly for me and I'm the boss, I can't pay them as an outside contactor.

[eggy]

Well in a sense yes, but they are kinda like hiring a outside handyman service....but I guess if I need to go threw all the paper bs then..so be it..seems silly for freinds helping out from time to time....I still think the 1099 misc would work.

[NateinAtl]

My accountant told me if they dictate when they work, then they are independent contractors. Check with your accountant to make sure, but I would think that they qualify as such. It will be a whole lot easier for you.

[OBRYANMAINT]

that is probably the best way to proceed

[BRL]

There are a whole list of rules that the IRS uses to differentiate between subcontractor or employee.
Work your way down this page to help you answer your question.
http://www.irs.gov/plain/tax_edu/faq/faq12-2.html

[lawnboy82]

that would be nice if friends can just be paid regularly. but what if somebody gets hurt? you still need a workmans comp policy on them right? cause it is very nice for them to help you out, but what happens if the guy slips or something and has to go to the hospital or whatever.

[GreenQuest Lawn]

I worked for a place once that paid cash and then gave us a 1099. If its not alot of money then i dont see a problem. I made quite a bit of money that year and got nailed on taxes. I believe it was self enployment taxes or something like that. At any rate i got nailed for an extra couple of hundred dollars in taxes.

[thelawnguy]

If they are friends just pay them cash and have your number cruncher bury the expense elsewhere. Some friend if you are going to throw them under the IRS bus.

[Scraper]

Ditto Lawnguy...beer(after work), food and some cash keeps my friends happy...they just like working outside from time to time...

[eggy]

Hmm this gets more confusing even yet. The the IRS site wasnt very clear. All people who will help me out are currently employeed. however..they all know how to use a trimmer, and mowers..they do not need guidence..on the use of these tools...they pretty much tell me when they can work..such as saying hey I am off on Wedensday. I do carry workers comp. They are kinda like hiring a handy man....?

[dmk395]

I would recommend speaking with an accountant, but a 1099 will probably be fine. Nevertheless in the future if you are going to give someone a 1099 you should really let them know earlier in the year, like when they first start working for you. That way nobody gets caught with having to pay big bucks at the end of the year.

[GroundKprs]

A subcontractor usually brings his own equipment and sets his own hours. From your description these were employees. While it sometimes can be done, it takes a bit of planning to have subcontractors work on your jobs with your equipment.

However, if you are talking about the 2000 tax year, 1099-MISC and W-2 forms were due to recepients on Jan 31. Also, both had to be to IRS by Feb 28.

[CMerLand]

These guys are not independent contractors just because they say "Hey I can work on Wednesday." The IRS has a very long list of items that these guys would have to meet each and every one of to be considered independent contractors. Some of these include,
Does the person provide his own tools and materials?
Is he paid per job not on an hourly basis?
Does the person provide similar services to other contractors?
Does the person carry his own liability/workers comp. policy?
Is the person responsible for when and how the work is completed or is he directed by the primary contractor?

Even when you have true subcontractors, an IRS auditor will work very hard to prove that these are employees and not subcontractors. Once found that these guys are actually employees you will be fined, and then be forced to pay all back taxes not collected from these employees. Your insurance company may also try to collect back premiums from you for workers comp based on the adjusted numbers in your annual payroll.

Employees are part of the cost of doing business. If you are running your business properly recovering the additional taxes and costs associated with employees should be done through properly figuring the cost of your services.

CMerLand

[eggy]

Well guys my nest question is...Know of any good payroll software or payroll recommendations? And by the way this is for planning this upcoming year..not last..thanks