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  #1  
Old 04-20-2003, 06:22 PM
hustlers hustlers is offline
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Join Date: Nov 2000
Location: MN
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1099 empoyees--legal

I have a friend in the business and he 1099s his
employees so he can get the deduction without
paying workers comp/

Is is legal to 1099 an employee so they are a subcontractor
and not an employee, even though they get paid by the hour.
he is definitely an employee not a sub

The employee/subcontractor is getting ripped off cause he
has no insurance, liability, no writeoffs.?????right or wrong

Is this ok or crooked?? I have done everything legit but
i want know what you think about this other bus. owners decision
before i ever try it
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  #2  
Old 04-20-2003, 07:16 PM
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rodfather rodfather is offline
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He is breaking the law...no question. Maybe Bruce Stansberry will view this thread and shed some light for you...and your idiot friend.
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  #3  
Old 04-20-2003, 09:13 PM
John Allin John Allin is offline
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It's as illegal as it gets......
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  #4  
Old 04-20-2003, 09:25 PM
landscaper3 landscaper3 is offline
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Yes and never get caught! You will be paying fines out of your tush!!!!!!!!! Workers comp is the ONLY way to do it right.
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  #5  
Old 04-20-2003, 09:54 PM
Doc Pete Doc Pete is offline
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Quote:
Originally posted by rodfather
He is breaking the law...no question. Maybe Bruce Stansberry will view this thread and shed some light for you...and your idiot friend.
As I was told, if the worker doesn't have WC, it falls back on the one paying the worker. If he doesn't pay the WC, the worker can sue him...... It's been done, to the tune of $18,000. The worker told the employer either you pay me $18,000 for "lose of use" or I go the state WC bureau.........
Pete
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  #6  
Old 04-21-2003, 10:14 AM
bruces bruces is offline
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Probably not illegal. Work comp depends on the laws of each state.

From the IRS standpoint there is probably no way they are not employees. They should be employees, payroll taxes withheld, etc.

What will he do when someone gets hurt and turns in a workmen's comp claim. The "contractor" will forget that he said it was ok to get a 1099.

Or one will go file for unemployment after they are fired. Then the state will determine that they were an employee and you are subject to back payroll taxes.

And then the state will share that information with the IRS and they will want their back taxes.

And then your friend won't have enough money to pay the taxes and fines.

And then.........







Out of business!!


Moral of story, do it right to start with!
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  #7  
Old 04-21-2003, 05:23 PM
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Fantasy Lawns Fantasy Lawns is offline
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He is gambling with the devil .... n the IRS NEVER loses ..... the back pay on W/C & Payroll taxes ..... That's gonna leave a mark

All it takes is 1 accident or 1 "sub contractor" to make a phone call

Get the W/C even if not required by your state (less than 3 employees)

Educate customers that you have it & what it means to them
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  #8  
Old 04-21-2003, 06:31 PM
Got Grass? Got Grass? is offline
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Join Date: Feb 2001
Location: Western NY
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As far as I thought (I know almost nothing about this kinda stuff) if the person get paid by the hr then they are automatically your employee.
If they work FOR you they are an employee. If you contract another company out to work then they are a sub.
A subcontractor provides his own means of completing the work, truck tools etc.. I assume you can lease something to him but then it would get tricky. He can choose when to work, how & when the work gets done. He can hire anyone he wants to help him with the work. Providing they are an employee of his & not another sub contractor (if thats in the agreement)...

So, basically you can provide your subcontractor with a spec. sheet for the job. Such as material (stone/mulch etc...) types & amounts (Install a depth of 3-6" etc...), equipment limits (no dumps or skids on the property), A start & finish deadline (salt the lot by 7am, finish the install by wed. so the sod guys can come in Thursday.etc...). etc...etc... & so on...
The rest is up to the sub....


I could be completely wrong but like I said I don't know.
I would also like to hear others comments & tips for the use of subcontractors.
This is defiantly a complicated matter you NEED & MUST discuss with your lawyer & accountant about. The smallest detail can lead you to massive fines & quite possibly shut you down for good.
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  #9  
Old 04-21-2003, 11:26 PM
A1 Lawn@Landscapes A1 Lawn@Landscapes is offline
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Location: Massachusetts
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Go to the IRS website. Their is a 20 question worksheet there to determine if someone is an employee or a sub.
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  #10  
Old 04-21-2003, 11:32 PM
LAWNGODFATHER LAWNGODFATHER is offline
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Location: St. Louis, Missouri Gateway to the west
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If they work for you they are employees no matter what method of pay they receive.

To qualify as a sub in this instance they must pay their own bills, have their own ins, have their own truck and equipment, pay for their own gas, etc.....They must also be a registered company

You write company a check.

There are a few small loop holes to this, but I wont post them publicly and they really don't prettier this matter.
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