employee pay

bjhilburn · February 22, 2009

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 :lol2

addicted to tint · February 22, 2009

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!

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!

TTS · February 22, 2009

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.

:lol2

February 23, 2009

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.

Tintmaster08 · March 31, 2009

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.

It's shop owners like you that I would like to :lol :flip :beer :shoot1 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! :beer :cool :dunno on you!

April 4, 2009

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

April 16, 2009

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-

TTS · April 16, 2009

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

tint123 · April 16, 2009

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.

April 16, 2009

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

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.