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  1. #1
    Join Date
    May 2010
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    2

    Default New Business with 1099 Workers

    I am running a lawn care maintenance / landscape business in Texas. What documents / contracts / agreements are required between myself (general partner) and the 1099 employees to satisfy all legal and tax concerns.

  2. #2
    Join Date
    Jan 2006
    Posts
    38,867

    Default Re: New Business with 1099 Workers

    what makes you believe you can legally treat your employees as 1099 independent contractors?

    You need to investigate why you can or can't treat them as independent contractors and act accordingly.

  3. #3
    Join Date
    Dec 2007
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    2,357

    Default Re: New Business with 1099 Workers


  4. #4
    Join Date
    May 2010
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    2

    Default Re: New Business with 1099 Workers

    I am not sure if they qualify as 1099 employees - but they seem to meet much of the criteria as well as being listed in an EFTPS sight as one of the most common fields for independant contractors. They do not work regularly, but as and when required. They are free to accept or reject work. They are not trained. they provide some of there own equipment. They take other jobs at will from other companies. They are not supervised. It is a seasonal business.

    I have only verbal agreements with the workers and they are paid at the end of each week. They have signed W-9's. Is there anything else?

    I am not sure if they qualify as 1099 employees - but they seem to meet much of the criteria as well as being listed in an EFTPS sight as one of the most common fields for independant contractors. They do not work regularly, but as and when required. They are free to accept or reject work. They are not trained. they provide some of there own equipment. They take other jobs at will from other companies. They are not supervised. It is a seasonal business.

    I have only verbal agreements with the workers and they are paid at the end of each week. They have signed W-9's. Is there anything else?

  5. #5
    Join Date
    Dec 2007
    Posts
    2,357

    Default Re: New Business with 1099 Workers

    I am not at all comfortable with your characterization of them meeting the criteria for IC status. You said you provide SOME tools, and how much training does the job need anyway? Plus, ANY employee can moonlight if the employer doesn't have a policy against it. Plus, being able to turn down work (Joe, can you work tomorrow? No. OK, call you the next time) is not, in and of itself, a determining factor. The IRS looks at the totality of the conditions.

    All it would take is one p*ssed-off worker to file for unemployment or file a complaint with the IRS and there ya go--big trouble and a lot of time spent defending the decision, even if you do turn out to be right.

    To be on the safe side, I would recommend completing and submitting an SS-8 form and let the IRS (which uses the basic "common-law test" and which is generally accepted as the standard) make a determination. You can get the form at the IRS website.

    And just to pick a nit, there are no such things as "1099 employees". They're either employees (W-2) or independent contractors (1099-MISC).

  6. #6
    Join Date
    Dec 2009
    Location
    Lake Chapala
    Posts
    2,979

    Default Re: New Business with 1099 Workers

    Quote Quoting mtlyon4
    View Post
    I have only verbal agreements with the workers and they are paid at the end of each week. They have signed W-9's. Is there anything else?
    If they're not legally independent contractors then there's nothing else - no documents, no nothing - that'll change that.

  7. #7
    Join Date
    Mar 2009
    Location
    Key West, FL
    Posts
    2,350

    Default Re: New Business with 1099 Workers

    There is no way I can conceive a lawn care business calling its employee's independent contractors and getting away with it.

    I do not know of any way you could run a lawn care business with IC's.

    It would not be your business. About the only thing you could do is be a sales agent for them, and hope that they show up and do the work you sold for them. That is about the only way you could call them IC's.

    It makes no difference what contracts you come up with, they would not stand up. I also can't imagine anyone being stupid enough to sign one unless they were really desperate.

  8. #8
    Join Date
    Jul 2007
    Location
    Florida
    Posts
    2,344

    Default Re: New Business with 1099 Workers

    There is no such thing as a "1099 employee". If they are an "employee" then you have to withhold taxes, match the social security and medicare tax, and give them a W-2. I believe if I was preparing the tax return for one of these people who do work for you I would likely advise them to file a form SS-8 with the IRS requesting a formal determination of their status either as an independent contractor or an employee. There's a strong likelihood that the IRS would consider them employees. That would be very expensive for you because no only would you have to cough up the taxes you were supposed to withhold and match, but you would also have heavy penalties. I am helping one business client right now to whom this happened and we're dealing with an IRS bill for over $75,000.

    There is no one test that conclusively determines this status. The IRS will comprehesively review the facts and circumstances under which the work took place and compare those to their tests based on common law: http://www.twc.state.tx.us/news/efte...s_ic_test.html

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