taxes for one-time job help

Discussion in 'Business Operations' started by idreamgreen, Jul 5, 2007.

  1. idreamgreen

    idreamgreen LawnSite Member
    Posts: 8

    So I was lucky enough to land a great pressure washing job and because of it's size I asked my brother-in-law to help me. I agreed we'd split the money for splitting the work. The check will be made to my landscape business, so obviously I will be stuck paying the taxes for all of the money. How much should I withold for taxes before splitting the monies??
     
  2. bohiaa

    bohiaa LawnSite Fanatic
    Posts: 5,220

    your kidding, RIGHT ?
     
  3. lawnMaster5000

    lawnMaster5000 LawnSite Senior Member
    Posts: 589

    does your brother in law have his own company?

    If yes - then pay him as a sub and write him a check for half.

    If no - then pay him as an employee. It is up to you two if his portion is before or after employment taxes. I would think that you agreed to pay him half then your pre-withholding amount is his 1/2. The actual check written to him will be for less than half of the total bill.
     
  4. bohiaa

    bohiaa LawnSite Fanatic
    Posts: 5,220

    cant really pay him as an employee, you just 1099 him, that is that.

    then it's up to him to pay his taxes,

    If you loophole it and try to pay im as an employee, your gonna open up a huge can of worms,
     
  5. lawnMaster5000

    lawnMaster5000 LawnSite Senior Member
    Posts: 589

    I may be missing something - so please help me

    Why would he be "loophole"ing anything if he paid him as an employee?

    Someone that worked as an employee cant be paid as a contractor, as you are suggesting by having him 1099.
     
  6. bohiaa

    bohiaa LawnSite Fanatic
    Posts: 5,220

    Simple. you cant have him as an employee, you can only 1099 him.

    quick and sweet, an employee is a person that you say here's a list, take that truck and equiptment and go do the job.

    a non employee is a person you say get in the truck lets go. = 1099

    now, if he's employee, he needs to be on your insurance, and workers comp,
    you PROVIDE EVERYTHING.....

    if he's 1099 you dont provide insurance, or Workers Comp.

    Employee YOU take out taxes, and SS.
    1099 He's responable for it...
     
  7. lawnMaster5000

    lawnMaster5000 LawnSite Senior Member
    Posts: 589

    bohiaa

    I am not sure where you are getting your information but you may want to check with the IRS on this matter.

    According to the IRS:
    "A general rule is that anyone who performs services for you is your employee if you can control what will be done and how it will be done. This is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed.

    Before you can know how to treat payments that you make for services, you must first know the business relationship that exists between you and the person performing the services. The person performing the service may be:

    An independent contractor
    A common-law employee
    A statutory employee
    A statutory nonemployee
    For additional information on the different types of employees and information on independent contractors, refer to Independent Contractors vs... Employee."


    Furthermore the IRS states:
    "Who is an Independent Contractor?
    A general rule is that you, the payer, have the right to control or direct only the result of the work done by an independent contractor, and not the means and methods of accomplishing the result."


    My understanding of these documents shows that the brother can ONLY be an employee, but if the brother provides his own equipment and schedule it can be argued that he was working as a contractor.

    Please consult these 2 websites for further information on this matter.
    http://www.irs.gov/businesses/small/article/0,,id=99921,00.html
    http://www.irs.gov/businesses/small/article/0,,id=98862,00.html#2
     
  8. bohiaa

    bohiaa LawnSite Fanatic
    Posts: 5,220

    According to the IRS:
    "A general rule is that anyone who performs services for you is your employee if you can control what will be done and how it will be done. This is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed.

    RIGHT......... this is how it was explaned to me, by my tax man.
    If you provide the jobs, the equiptment, and hand a guy a list and say take that truck and go mow these lawns, be back here at 5:00 PM
    He's an employee

    If you say get in the truck lets go, he's 1099, also you can 1099 up to 600.00
     
  9. lawnMaster5000

    lawnMaster5000 LawnSite Senior Member
    Posts: 589

    Bohiaa please don't take this as me trying to argue with you I am trying to understand the tax laws.

    If you are directing an individual where to be and what to do with equipment you provide that person is going to be an employee as you agreed.

    If you are telling someone to jump in the truck and lets go, then how is that not telling them when and what to do?

    I agree with your example of
    "If you provide the jobs, the equipment, and hand a guy a list and say take that truck and go mow these lawns, be back here at 5:00 PM
    He's an employee"

    However if you give that same person a list and tell them to get the jobs done sometime Tuesday with their own equipment then they are a contractor and you should 1099 them.

    If I get an individual off the street to jump in the truck with me to go mow a few lawns real quick then that person is an employee no way around it. As an employee they do not receive a 1099 but rather the whole employee tax package. do you agree?
     
  10. bohiaa

    bohiaa LawnSite Fanatic
    Posts: 5,220

    Not the way it was explaned to me...

    I sometimes use day labors. the guy who's working FOR you, "or me" and he's just doing a job for a day or two, is NOT an employee, even though he's using your equiptment, and WERE TELLING HIM. do this do that.
    even though the tax laws say that's an employee. according to my tax man he's NOT,

    there is the 600.00 rule that applys here, untill he reaches 600.00 he's NOT an employee, after that HE is.

    I hear ya, It's hard to understand, If we sub'ed out work there 1099's
    and because this "day labor" is NOT going to reach over the dollar ammount he's not an employee,

    were NOT really liable for his insurance, Workers comp and such,
    he wont be driving a truck so there's no need to put him on the driving insurance, <---- "Hope I said that right"


    If you are telling someone to jump in the truck and lets go, then how is that not telling them when and what to do?

    Yes Kind-of, this is where I got stuck too.

    your right, If I take a day labor and say here's my mower, there's the lawn cut it, I am Directing him, BUT, I'm not standing over him and saying Pull this weed, now pull that one,
    Nor am I saying, push the mower up this side, then go down that side,
    It falls under a more STRICT guideline, of like written instructions. and we dont do that.

    However we do say put the mower on a 3" and cut the front yard, so it gets tricky there,
    the only thing that makes the diffreance is the 600.00 thing....

    this is the way my guy explaned it,

    But even though he dont reach the 600.00 he's still tax ductable...
     

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