I know it's frowned upon and...

Discussion in 'Business Operations' started by Jpocket, Mar 6, 2006.

  1. Jpocket

    Jpocket LawnSite Silver Member
    Posts: 2,278

    Illegal if the employee doesn't know it and doesn't understand. But if you and your employee(s) are in agreement that they are a sub-contractor, and are to pay their own taxes, carry there own insurance etc... Wouldn't that be that be a legal way of doing business. I realize that generally speaking a Sub. is to have his own truck, equipment, and schedule. But if you both agree what was stated above....whose gonna know or even care? Why would the IRS care if he is paying his taxes? I just don't see the discrepencey if you are both in agreement.

    Some of you guys with "Real businesses" Shed some light on this...Thanks
     
  2. lawnman_scott

    lawnman_scott LawnSite Fanatic
    Posts: 7,547

    What % of tax payments could the irs count on getting in on a timly manor if every employee had to pay in their own? Thats the reason, plain and simple. It would get people out to vote though, thats for sure. Government waste would go down, of course we would be having a civil war..........
     
  3. mmacsek

    mmacsek LawnSite Senior Member
    Posts: 544

    The last sentence sounds like it would solve alot of problems!!! I don't mean to insult you but it sounds like we think the same. Matt
     
  4. Trinity Lawn Care  LLC

    Trinity Lawn Care LLC LawnSite Senior Member
    from NJ
    Posts: 946

    Hey JPocket,

    I hope that this helps. Unfortunately it doesn't matter what you guys agree upon it all comes down to how the irs views it. Here is some info.

    The determination is complex, but is essentially made by examining the right to control how, when, and where the person performs services. It is not based on how the person is paid, how often the person is paid, nor whether the person works part-time or full-time. There are three basic areas which determine employment status:
    • behavioral control
    • financial control and
    • relationship of the parties
    (This info is available on the irs website)

    http://www.irs.gov/pub/irs-pdf/p15a.pdf

    Again, I hope that this helps.
     
  5. AintNoFun

    AintNoFun LawnSite Bronze Member
    Posts: 1,807

    ive heard of contractors getting screwed by the irs because of subs not having insurance. i know my c.p.a. can not tell me enough if anyone does work for me get a copy of their insurance cert. before they even get paid and there will be no problems!
     
  6. Roger

    Roger LawnSite Fanatic
    Posts: 5,927

    Jpocket ... there is no "... generally speaking." Trinity has laid it out, and the rules are very specific, nothing general.

    This issue is very clear across all industries. In a past career, our company hired highly skilled, highly educated engineers for certain tasks. We had the same guidelines to follow regarding what kind of work they could do, how independent they worked, their equipment, etc. The issue is not unique to lawn service, or other industrial contracting situations. I telll you this because the government agencies have a sensative antenna for these working arrangements.
     
  7. Killswitch

    Killswitch LawnSite Senior Member
    Posts: 438

    And specific guidlines that no "employee" could get around.

    Its entry level tax evasion at best, and easy pickins for an agent with a quota.

    If you're gonna do that just pay them cash and be done with it.
     
  8. olderthandirt

    olderthandirt LawnSite Platinum Member
    from here
    Posts: 4,900

    Never read the other responses but if the other guy gives you an invoice after each job and is paid after each job and uses "his" tools he's legally a sub
     
  9. daveintoledo

    daveintoledo LawnSite Silver Member
    Posts: 2,587

    his truck, his mower, HIS INSURANCE, his schedule, his gas, he sends you and invoice for work completed......... otherwise he is an employee and cant be 1099..... prison is full of those who think otherwise..hahahaahha:)
     
  10. olderthandirt

    olderthandirt LawnSite Platinum Member
    from here
    Posts: 4,900

    Everyone looks at the practice as if its illegal and its not. There are guide line to follow and if you follow them its perfectly legal to hire subs.
    A guy has his own truck and mower and all you tell him is I need these 10 yds mowed when the grass gows an inch or more and I don't want it to be over 2" before its cut. He sends you an invoice for the work when completed and you cut him a check its legal. He set the time and uses his own tools. Insurence has nothing to do with him working as a sub. If he has it thats great and shows even more independence but its not required to be a sub and same as WC if he has it great . Every commercial job that sends you a 1099 does not have a copy of your insurence. And they may not set your scheldule but thet expect the property to be mowed when needed.

    The best thing if in doubt is check with a CPA -----but it can be done legally
     

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