1099ing employees

Discussion in 'Business Operations' started by troblandscape, Jan 15, 2003.

  1. troblandscape

    troblandscape Guest
    Messages: 0

    What are the pros and cons of 1099ing employees. Are alot of people doing it? Is there any way this could come back and bite me?
  2. Scraper

    Scraper LawnSite Bronze Member
    Messages: 1,656

    Definitely will come back and bite you as they are working for you in a labor capacity and not a subcontracting capacity. As such you need to withhold taxes, social security and obtain workers comp coverage. Do a search as this has been discussed indepth.
  3. 2 man crew

    2 man crew LawnSite Senior Member
    Messages: 403

    For one thing, if you are calling them employees you can not 1099 them.

    If you call them subcontractors and you are 1099ing them thats fine.

    In order to clasify them as a subcontractor they would have to be using their own tools and equipment along with other rules.

    If you are 1099ing your help and they get hurt on the job that will be a problem.
  4. rodfather

    rodfather LawnSite Fanatic
    Messages: 9,501

    Yes, it can come back and bite you simply because it is against the law. There is ABSOLUTELY no such thing as 1099ing employees.
  5. B. Phagan

    B. Phagan LawnSite Member
    Messages: 95

    Just wanted to echo what the others have said.......1099's are illegal by law. The 3 basic criteria as described by the IRS are:

    1. They must provide their own equipment

    2. You cannot dictate their work schedule

    3. They must provide their own insurances

    When you are caught, your co will be "Trouble Landscape" for sure.
  6. Kent Lawns

    Kent Lawns LawnSite Senior Member
    from Midwest
    Messages: 870

    You cannot 1099 an employee.

    I read a list awhile back (15 years ago) that detailed the criteria to catagorize an employee or subcontractor. I think there was about 25 items the IRS uses to differenciate the two.

    I hope dictating work schedule isn't a big one, 'cause I tell my plow subs EXACTLY when to be on site.

    If they report directly to your office every day for work, you've got an employee.

    Can you "get away with it?" Perhaps for a while, but when (not if) you get caught, you'll jepordize everything you've worked for.
  7. Casey

    Casey LawnSite Member
    Messages: 142

    I had a friend a few years ago that tried this, he even hired an attorney to set up a small corporation for each of his employees. He got away with it for a few years, when the IRS finally caught up with him (one of his ex-employees turned him in), the big thing that they nailed him with was the fact that he told his "sub-contractors" when they had to be at the site. He had to pay several years of Social Security, (they made him pay both the employers half and the employees half) some very large penalties, and then the wage and hour people got involved, didn't have any time cards, (since they were "sub-contractors") the wage and hour people took the employees word for how many hours they worked, he had to pay back overtime plus penalties. In a nut shell everthing that he had worked many years for made for a very nice auction.
  8. troblandscape

    troblandscape Guest
    Messages: 0

    Thanks for the replies. I think I will stay away from 1099.:dizzy:
  9. rodfather

    rodfather LawnSite Fanatic
    Messages: 9,501


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