employee pay

just wanted to talk to my fellow business owners about payroll & tax paying vs. 1099. I've been doing 1099's for the last 4 years on my employess. Recently I looked into putting my main installer on payroll due to the amount of tax she owed for 08. I don't see any advantage for myself doing this. What are your thoughts and why the helll do I have to match ss & medi ? I'm blown away.

It's really pretty simple.... if they are employee's then it is !llegal for you to just 1099 them.

Their whatever I want to call them, saying their one thing & filing a different is totally fine in my book. I'll call my subs employees if their here everyday & thats how I choose to refer to them.

I would suggest IRS.gov

There you will find answers to all your questions. If that is the way you have been operating.. you should say an extra prayer tonight that you or your employees don't get audited.

That is not true. I am a CPP and can tell you if one of your employees ever got smart you would be on a world of hurt!

The IRS states if you have an employee you must not only withhold taxes but pay your portion of payroll taxes. You are cheating the IRS, FUTA, and SUI. You are breaking the law and this can not only shut you down but put in you jepordy of losing your home and having all of your accounts frozen by the IRS.

Do the people have to be at work at a certain time? If so they are employees. Do they get a 1hr lunch break? If so they are employees. Do you negotiate every job as far as pay or do they get an hourly wage or salary? If they get an hourly wage or salary, then they are employees.


The list goes on and on, but you have been warned you are playing with fire!

Thank You!

4 yrs my friend. 4 yrs.... wow that is a lot of cash.

Their here as needed (sub-contract.) & yes pay is negotiable. I have one in particular who shows up every morning but can also leave whenever, It's totally legal & legit, they pay their taxes I pay mine. I'm saving on having to pay ss & medi. The reason I started this thread was to seek benefits as an employer on putting someone on payroll vs. 1099. My accountant is a 50 year old vet. I'm sure he knows what he's doing & wouldn't file anything to throw up a red flag.

it's totally legal to use sub contractors in a business on a daily basis if it wasn't it wouldn't be an option. Also, if you need them to be at the job at a certain time everyday there is work and pay them whatever you choose even if its a set amount thats legal too.

Not trying to be an ass, but nice back step....

I can almost 100% guarantee you the IRS would not agree and I don't care if your CPA is 100.... it is your accounts that will be frozen not his!

A friend of mine worked for a small engineering company and was paid hourly with set hours. When he was laid off the company said he was a contractor, but when he showed his pay stubs he did get the unemployment because they had the hourly wage on them.
BTW im not a business owner, just my

Without a doubt! Think about it, you can't get away operating with the same 4 people around you full time and calling them "subs". Amazing they go along with it....This will bite you in the ass when one of them becomes disgruntled. I've seen just what you describe cost my uncle HUGELY!

Ya know audiopros.... In my area it's operators just like you who ruin the market.... They charge low prices claiming their overhead is sooo much lower than others.....

The reality is they are cheating their employees and the system out of things like transit taxes, workers comp, ss & med, un-employement insurance both state and federal, etc...

Having employees is really quite expensive and a business will need to adjust their pricing accordingly to compensate.

I 200 million% agree with TTS I've worked in his area for along time and there are ALOT of shops that pay 1099, and the cold hard truth (besides being BS) if those guys are 1099 they are not your employee and they are legally free to come and go as they please. the sole reason 1099 is so popular is because you can skate on all the taxes, W.C., some ins. etc..

W2 employees costs alot of $ espically if your small but thats the correct ethical thing to do.

It's shop owners like you that I would like to I am currently taking my boss through the bullshit that he needs to go through for misclassification of workers, and trust me he aint to excited he spent 30000 on a new harley cash, because now the IRS is tearing him a new ass hole, and I hope they get you to! on you!

Due to recent changes in how the IRS views sub contract labor, that is how so many illegals were able to work under the radar previously.
According to the IRS a Sub contractor is someone who comes in on a temporary basis to perform 1 job for you and once it is finished they go on to another job, for example plant shut downs, they bring in tons of sub contract labor for about 2 to 4 weeks then they are gone, if you have the same people every day for 4 years that is not sub contract that is Employee's, you can argue all you want that they are not employees if the IRS comes in your screwed big time, more than likely will cause you to close your doors and still leave you with a large tax bill you will be paying off the rest of your life.

The reason why your employee had to pay so much in taxes is that you are making them pay the matching FICA no matter who pays for it it has to be paid, either the business or the person who is 1099 so because you wanted to save on paying your share you made your Employee pay the matching,
look at it this way take her salary per hour and multiply it by .0765 that is how much that employee needs to make more every hour to pay their matching Fica, other wise take the same amount and deduct it from their hourly salary and that is actually how much you are actually paying them

to go one step farther, individuals are not required to pay into SS only businesses do, so for every year she has been employed there she has not received the credit for any money into their SS account, it may not be there when they are ready to retire but you are still short changing your Employee, not to mention unemployment benefits if you have to lay them off

I am by no means a pro Government I can not stand the way our rights have been violated over the last few years and most notably the last 70 days

less government in our life is better

If you refer to anyone working in your shop as employees then you would be obliged by tax law to withhold and match the 7.65%, but if you were to refer to these people in your shop as subcontractors then you would be fully justified in not withholding and issuing 1099's. At that point the burden of tax payment is shifted to the subcontractors, and they are obligated to pay Self-employment taxes amounting to 15.3% of their earnings every quarter. Really, your CPA is technically right, but you must be careful in how you refer to them if you were ever to be audited. Its really not you cheating the system because once you don't withhold it becomes the individual's burden to keep track of their prepayments. That is why they must withhold 15.3% instead of 7.65%.
-Tinting windows to pay for school and become a CPA-

keep tinting.... you got a ways to go...

How were these installers brought on board at your place of Business?
Did they fill out an application to work for you ?
Do you expect an installer to let you know if they will be late, or if they are not going to show up for several days ?
They have the freedom to work as many or as few days as they wish ?
One of them does not show up for several days, are you calling asking why they did not show up ?
Do they have the freedom to go shopping several hours in the middle of the day ?
I THINK if you are the source for all of, the greatest majoirty of their yearly income, that might make a person an employee as well.
I feel there are enough folks on here who can research, or have the resources to find out for certain on this.

Well, yes I do have a ways to go until I'm finished with school, but that doesn't mean I'm not right. You can have the same people working for you regularly for many years, and you can give them an hourly rate without having to make FUTA and SS contributions. That is as long as you refer to them as "subcontractors". By definition a subcontractor is someone that has been given full or partial contract rights obtained by the contractor in any particular agreement as long as the terms of the agreement do not prohibit such an action. Which would make them self-employed and subject to self-employment taxes which in theory should provide the same tax revenue as if the owner had treated them as normal employees. If the IRS flags this guys shop for an audit, and he or his CPA ever refered to these people as "employees" then he would be in a world of hurt from pentalties and compounding.
Maybe you are the one that should keep tinting. Obviously, federal income taxation is not your specialty either.

The problem here 2Cool is you obviously have not bothered to read irs.gov rules and regulations in respect to employee classification.

It is NOT 'he said she said slip of the tongue'... There ARE very clear cut and defined rules to distinguish between the two....

Back on the short bus... this time grab a text book so you can study..

off sub. but i almost tinted for this guy in my area who wanted to pay me 5.50 pr hour.lmao..thats a 1.25 below minimum wage.he said he dont care.so i walked out with my middle fingure in the air

Maybe I'm not making myself clear enough so I'll preface this a little deeper. In this industry it is common practice for window tinters to take as long of breaks as they want, bring their own tools, and they are free to find work in other places without fear of reprisal. Therefore, they are subcontractors or "independent contractors" as the IRS refers to them. Because it is common industry practice to use subcontractors it should not raise any red flags when you classify these people as independent contractors. I'm not saying that the OP doesn't have an employer-employee relationship by its substance because it may very well be the truth.
What I'm saying is that as long as you keep your statements within some basic guidelines you will not have an issue proving in an audit that these people are indeed independent contractors and not employees, thats assuming you only provide them with compensation for work done without benefits of any kind. The rules are not as clear cut and defined as you would like to believe. In fact, they are filled with loopholes big enough to pull a window tinter through.

but hey, keep being a d-bag you'll just drive home my point further and further

Sounds like some shady %&$# right there..........................d-bag

I use W-2

It is VERY clear that you came into a battle of the brains completely un-armed.... That's ok....

What really matters is that a business owner get all of the facts before they get stuck with a bill from the IRS for past due tax obligations that could have been totally avoided.

Bumbling along thinking you can just say a couple key phrases and it will all go away is ignorant.

I see you have ignored my advice to run along to the irs.gov website and get your facts in order before throwing out a 'd-bag' comment....

I'll just pretend the 'd' is for doughnut bag... which sounds kinda good right now!

Oh, how sad you are, my friend... Your ignorance and one-way thinking have come out again and again in this thread. Obviously there is no way to get through that thick skull of yours on this issue. Just to be clear, I have read literature from the IRS's website and much more on related subjects. I'm not worried a bit about my knowledge in these subjects, but you seem to defend something you couldn't explain if you tried. The sad thing is that I wouldn't risk getting nipped for not matching employee holdings, and as a business owner I would find it prudent to avoid as many gray areas when it comes to taxes. Personally, I would find it unethical to classify an employee just to save a few bucks that can be used as a deduction later on to help reduce taxable income.
Anywho, keep telling yourself that you know everything, but anyone can see that it is your ignorance that blinds you...

I guess I am in a pretty fortunate position where I am able to rely on professionals in their respective fields for solid advice.

Some day the world may revolve around some wet behind the ears 24 year old jackass and his opinions... but until then.. I will stay with more proven methods..

Now that doesn't mean we can't still be friends

We should all be da friends on TD! TTS I did just sent TriMet a check for over a thousand for a transportation tax payment. For you guys out of the area it is just a extra tax we get to pay in P town for the bus and train You play you pay now or .........

I wish I was out of the area...

tri-met is 'everywhere'....