Protecting companies from hourly employees
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@Dashrender said in Protecting companies from hourly employees:
When I owned my own company... I got 1099s, which I think is when you said I should be getting them.. because it was one company telling another company about something.. but something that's important to taxes.
Correct. If you get a 1099, ever, it means you are running a business. The question is whether you have properly set it up or are just taking 1099s and opening yourself to unlimited liability. That's not illegal in any way, just ridiculously foolish.
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@scottalanmiller said in Protecting companies from hourly employees:
@Dashrender said in Protecting companies from hourly employees:
@scottalanmiller said in Protecting companies from hourly employees:
@Dashrender said in Protecting companies from hourly employees:
How do you give tax info to a person who works more than $600 for your company in a year, if it's not 1099?
W2, that's the singular form for employment. An individual, in only the rarest of cases (read: it will never apply to you, me or anyone that we know) should never receive a 1099.
LOL I receive them all the time. I have been for years.
Tons of IT people do, it's a known scam run on IT people as IT people almost never know the law and how employment works. IT specifically is abused terribly.
how should this employment look then?
should I be a regular employee - with normal employee benefits where applicable? i.e. if I worked enough hours in a month they would have to give me healthcare assuming they provide it for full time employees? that they should pay the FICA taxes on my behalf? -
Remember that LLCs, S Corps, C Corps and similar are "Limited Liability" entities. Running a sole owner business or partnership is an "Unlimited Liability" business type. Never do that.
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@scottalanmiller said in Protecting companies from hourly employees:
@Dashrender said in Protecting companies from hourly employees:
@scottalanmiller said in Protecting companies from hourly employees:
@Dashrender said in Protecting companies from hourly employees:
How do you give tax info to a person who works more than $600 for your company in a year, if it's not 1099?
The one exception that I know of for 1099, is when you as a non-company need to hire another person for more than $600 to do some labor for you. In which case, you can pay them on a 1099. But in nearly all cases, that person would work for a company, not be an individual.
Why would you, as a person, not a company, care about giving another private person a 1099? why deal with the hassle? Can I claim a tax deduction somehow on that?
Because you HAVE TO. You know, tax fraud audits suck.
LOL this is one that's glossed over so badly it's insane. Or as you said, happens so rarely that the IRS doesn't bother looking.
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@scottalanmiller said in Protecting companies from hourly employees:
@Dashrender said in Protecting companies from hourly employees:
I get them from the clients I do work for on the side. What kind of employee would you classify me as when I randomly work for them 2 hours this week, then nothing for a completely random period of time, then 5 hours.. then random, then 1 hour, etc?
Well, if you are handling lots of clients, you should not be being paid directly it should always go to a company, that's just basic "working for lots of people" stuff. In that case, if you are confident that they in no way should be treating you as an employee, then you should form a company to handle the 1099. As a person, you can receive them, but really should not.
Back in the day, I had a company, and correct.. they paid the company.
Since then, the company has closed, and today they pay me directly, not a company.
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@Dashrender said in Protecting companies from hourly employees:
how should this employment look then?
should I be a regular employee - with normal employee benefits where applicable? i.e. if I worked enough hours in a month they would have to give me healthcare assuming they provide it for full time employees? that they should pay the FICA taxes on my behalf?Yes, just like any other employee. Why would it be a special case?
I think this is the crux of this discussion. I believe that all of these situations work the same, there are very simple, basic employment rules and laws that work for all of these cases. And most everyone is seeing each as a special case needed special rules and forgetting how hard it will be when the cases get close to each other (when a furlough is under seven days, when day labor goes on for a week, when contracting becomes a regular thing, etc.) They seem like special cases when viewed individually, but when you look at what rules would be needed to differentiate them reliably, it becomes very convoluted. Employment law isn't that hard, the basic rules handle all of these cases really well.
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@Dashrender said in Protecting companies from hourly employees:
@scottalanmiller said in Protecting companies from hourly employees:
@Dashrender said in Protecting companies from hourly employees:
@scottalanmiller said in Protecting companies from hourly employees:
@Dashrender said in Protecting companies from hourly employees:
How do you give tax info to a person who works more than $600 for your company in a year, if it's not 1099?
The one exception that I know of for 1099, is when you as a non-company need to hire another person for more than $600 to do some labor for you. In which case, you can pay them on a 1099. But in nearly all cases, that person would work for a company, not be an individual.
Why would you, as a person, not a company, care about giving another private person a 1099? why deal with the hassle? Can I claim a tax deduction somehow on that?
Because you HAVE TO. You know, tax fraud audits suck.
LOL this is one that's glossed over so badly it's insane. Or as you said, happens so rarely that the IRS doesn't bother looking.
It's hard to catch, so people often just go with the tax evasion, it's a lot of profit with very low risk, normally.
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@Dashrender said in Protecting companies from hourly employees:
how should this employment look then?
should I be a regular employee - with normal employee benefits where applicable?If you are doing this like an employee, then yes. If you are doing this like a contractor, then you should form a corporation for which you are an employee and then they can do 1099 B2B. Both are applicable. The question is, are you an MSP or are you part of their staff. THere is overlap here, grey area where you have to determine which you are more like. It's not always cut and dry, but it should be one or the other. Right now, you are doing a bad "in the middle" tax formation that is not good.
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@scottalanmiller said in Protecting companies from hourly employees:
@Dashrender said in Protecting companies from hourly employees:
how should this employment look then?
should I be a regular employee - with normal employee benefits where applicable?If you are doing this like an employee, then yes. If you are doing this like a contractor, then you should form a corporation for which you are an employee and then they can do 1099 B2B. Both are applicable. The question is, are you an MSP or are you part of their staff. THere is overlap here, grey area where you have to determine which you are more like. It's not always cut and dry, but it should be one or the other. Right now, you are doing a bad "in the middle" tax formation that is not good.
yeah, now that I understand. I act more like an MSP. Or another thinking, off retainer lawyer. I could be on retainer too, if I wanted, but it's not worth that effort.
The cost of maintaining a LLC or S-corp isn't worth the hassle for the small amount of funds that come in. minimal yearly board meeting mins, quarterly (or if lucky yearly), etc.
more tax forms, etc. -
@Dashrender said in Protecting companies from hourly employees:
The cost of maintaining a LLC or S-corp isn't worth the hassle for the small amount of funds that come in. minimal yearly board meeting mins, quarterly (or if lucky yearly), etc.
LLCs do not have those overheads. Anyone that is self employed should be an LLC at a minimum.
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@scottalanmiller said in Protecting companies from hourly employees:
@Dashrender said in Protecting companies from hourly employees:
The cost of maintaining a LLC or S-corp isn't worth the hassle for the small amount of funds that come in. minimal yearly board meeting mins, quarterly (or if lucky yearly), etc.
LLCs do not have those overheads. Anyone that is self employed should be an LLC at a minimum.
I'll admit I know nothing of the requirement of an LLC.
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@Dashrender said in Protecting companies from hourly employees:
@scottalanmiller said in Protecting companies from hourly employees:
@Dashrender said in Protecting companies from hourly employees:
The cost of maintaining a LLC or S-corp isn't worth the hassle for the small amount of funds that come in. minimal yearly board meeting mins, quarterly (or if lucky yearly), etc.
LLCs do not have those overheads. Anyone that is self employed should be an LLC at a minimum.
I'll admit I know nothing of the requirement of an LLC.
Depends on the state. Texas it is like $750 to file but then basically nothing to do after that. Very simple. Used to be $30. Nebraska, no idea. But you can use Texas, NY, Delaware, Nevada or whatever state you want.
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@scottalanmiller said in Protecting companies from hourly employees:
@Dashrender said in Protecting companies from hourly employees:
@scottalanmiller said in Protecting companies from hourly employees:
@Dashrender said in Protecting companies from hourly employees:
The cost of maintaining a LLC or S-corp isn't worth the hassle for the small amount of funds that come in. minimal yearly board meeting mins, quarterly (or if lucky yearly), etc.
LLCs do not have those overheads. Anyone that is self employed should be an LLC at a minimum.
I'll admit I know nothing of the requirement of an LLC.
Depends on the state. Texas it is like $750 to file but then basically nothing to do after that. Very simple. Used to be $30. Nebraska, no idea. But you can use Texas, NY, Delaware, Nevada or whatever state you want.
In Nebraska, IT services are taxable. If you are a company, I wonder if it's a requirement to have a tax ID so you can collect sales tax on the services you provide?
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@Dashrender said in Protecting companies from hourly employees:
@scottalanmiller said in Protecting companies from hourly employees:
@Dashrender said in Protecting companies from hourly employees:
@scottalanmiller said in Protecting companies from hourly employees:
@Dashrender said in Protecting companies from hourly employees:
The cost of maintaining a LLC or S-corp isn't worth the hassle for the small amount of funds that come in. minimal yearly board meeting mins, quarterly (or if lucky yearly), etc.
LLCs do not have those overheads. Anyone that is self employed should be an LLC at a minimum.
I'll admit I know nothing of the requirement of an LLC.
Depends on the state. Texas it is like $750 to file but then basically nothing to do after that. Very simple. Used to be $30. Nebraska, no idea. But you can use Texas, NY, Delaware, Nevada or whatever state you want.
In Nebraska, IT services are taxable. If you are a company, I wonder if it's a requirement to have a tax ID so you can collect sales tax on the services you provide?
That's a reasonable assumption. But all companies have tax ids as do individuals and that means that any 1099 work would need sales tax collected too. That you are not a registered company doesn't change that in any way.
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What that means is you owe a bit of taxes.
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Remember a 1099 is a business to business tax form. Any work you do, you are a business. If you take the 1099 as an individual, you are a sole ownership business operating under your own name with unlimited liability and using your social security number as your federal tax ID number. So all business rules apply to you in the harshest possible ways. The only way around this is to earn under $600/year and be exempt due to size or to be an employee and pay taxes via W2.
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@scottalanmiller said in Protecting companies from hourly employees:
@Dashrender said in Protecting companies from hourly employees:
@scottalanmiller said in Protecting companies from hourly employees:
@Dashrender said in Protecting companies from hourly employees:
@scottalanmiller said in Protecting companies from hourly employees:
@Dashrender said in Protecting companies from hourly employees:
The cost of maintaining a LLC or S-corp isn't worth the hassle for the small amount of funds that come in. minimal yearly board meeting mins, quarterly (or if lucky yearly), etc.
LLCs do not have those overheads. Anyone that is self employed should be an LLC at a minimum.
I'll admit I know nothing of the requirement of an LLC.
Depends on the state. Texas it is like $750 to file but then basically nothing to do after that. Very simple. Used to be $30. Nebraska, no idea. But you can use Texas, NY, Delaware, Nevada or whatever state you want.
In Nebraska, IT services are taxable. If you are a company, I wonder if it's a requirement to have a tax ID so you can collect sales tax on the services you provide?
That's a reasonable assumption. But all companies have tax ids as do individuals and that means that any 1099 work would need sales tax collected too. That you are not a registered company doesn't change that in any way.
Yep, You're right. But in my continuing case I make sure they pay use tax in my case so I don't have to worry about it.
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@scottalanmiller said in Protecting companies from hourly employees:
@Dashrender said in Protecting companies from hourly employees:
@scottalanmiller said in Protecting companies from hourly employees:
@Dashrender said in Protecting companies from hourly employees:
@scottalanmiller said in Protecting companies from hourly employees:
@Dashrender said in Protecting companies from hourly employees:
The cost of maintaining a LLC or S-corp isn't worth the hassle for the small amount of funds that come in. minimal yearly board meeting mins, quarterly (or if lucky yearly), etc.
LLCs do not have those overheads. Anyone that is self employed should be an LLC at a minimum.
I'll admit I know nothing of the requirement of an LLC.
Depends on the state. Texas it is like $750 to file but then basically nothing to do after that. Very simple. Used to be $30. Nebraska, no idea. But you can use Texas, NY, Delaware, Nevada or whatever state you want.
In Nebraska, IT services are taxable. If you are a company, I wonder if it's a requirement to have a tax ID so you can collect sales tax on the services you provide?
That's a reasonable assumption. But all companies have tax ids as do individuals and that means that any 1099 work would need sales tax collected too. That you are not a registered company doesn't change that in any way.
You can't file sales tax under the Business Tax ID, you need a specific Sale Tax ID, at least in Nebraska.
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I didn't read the massive amount of posts, but in some of my old jobs my co-workers were so overworked that they couldn't finish their responsibilities in their normal hours and were worried about losing their jobs so they went home and worked off the clock. It didn't matter what I said, they would keep doing it.
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@scottalanmiller said in Protecting companies from hourly employees:
@Danp said in Protecting companies from hourly employees:
Sorry, but that's not the way it works. You have to pay the employee for the hours worked. Then you counsel / discipline per the HR policy.
Not paying the employee can lead to much larger issues with the DoL.
That's not correct. If you tell someone to go home and they refuse they are trespassing, not working. Not the same thing. But you have to have a policy that makes it clear that they can't do overtime without something in writing.
In NY, you have to have a policy stating overtime will not be allowed without written consent (and have all employees sign it). If an employee does work over time, you still legally have to pay for that time.
And then you can discipline them for breaking company policy. But you are still forced to pay for time worked.
