Thoughts on 1099 vs W2 hires.

[smifwal]

I was a 1099 employee at one point (I didn't like it but I thought it was, what it was) and I have several contractors friends that 1099 their employees,(as defined by the IRS in post 10)I had no idea it was illegal so in that I am thankful for the thread and for my business practices moving forward should I chose to go the employee route. I will probably never be a employee again and if I did, now I know that I won't be taking a 1099 when told how, when on so on to complete a task.

I would consult your tax professional to see if what you are doing is correct (there may be more information left out of the original post), I find myself not including all relative information to try to keep the post short instead of writing what I feel like is a book

 

[Truck Shop]

This thread is probably as good of a example of the diversity on the site as any. Looks to me like it's a even mix of employees, self employed, and employers.

In case you missed the site objective:

I didn't miss anything, just stating a fact, which I guess got you stirred. Hardly even mix though.
Most on here are running a mobile truck or own a excavating outfit, and some are hobbyist,
but most have some kind of business.

 

[MG84]

The whole 1099 thing is a real grey area, my rule of thumb is if they have their own business and send me invoices I'm good with that.

I've intentionally kept my business small and simple. I have no W2 employees and only a very few sub contractors that I use and pay via 1099. They each have their own business that the bill me through, their own trucks, tools, insurance, etc. I tell them what I need done and where it is, then they work it in their schedule. I do require everything to be done to my design and specifications however.

 

[CM1995]

There is another side to the coin when it comes to the "how/what, the when and how to do it". We own our own business with W2 employees, licenses, etc however we sign contracts with GC's and owners that dictate how/what (stamped drawings), when (schedule) and how to do it (specs). Often times it also dictates where materials are to be purchased from. Actually if we don't do it how they tell us, when they tell us to do the job it could open us to legal trouble.

Also training. On large jobs we have to go through a safety orientation training in order to get the cards/ID to be on the job.

Just pointing out a distinction. You can be a one man band business and be subject to the conditions above and not be considered a W2 employee. Actually most of the boiler plate commercial contracts we sign has a provision stating that the contract is not an employment contract with the GC in the W2 since and we are responsible for all taxes, insurance, etc.

 

[John C.]

Truck Shop is a 1099 guy in W2 coveralls. Nothing wrong with a long leash.

 

[Truck Shop]

Truck Shop is a 1099 guy in W2 coveralls. Nothing wrong with a long leash.

I'm not programable, not a bootlicker, could care less about some ones authority, will let
some one know to f off at the drop of a hat, including business owners. I'm not the typical
employee, always on time, job comes first, would work from sunup to sundown, do the job
to the best of my ability, don't need to be directed, will work 6 plus days a week because
I like to work. I didn't show up to work complaining about work or working conditions, if
conditions were poor I improved that myself. As a manager I led by example, and by what
needed to be done with best outcome for all including business owner and other employees.
My job was to maintain equipment to a level of safe operation and set a high bar as a
standard that I considered safe for all even if I disliked who it was for. My job was not to
waste money but spend it wisely, because it wasn't my money I was spending. I missed 1.5
Saturdays in 20 years at last employer.
*
In this day and age of threads like {Finding Qualified Help} and all whining about employees.
Who ever I work for can damn well provided insurance, coveralls and what ever else and if
not the box has wheels and I have shoes, adios, it's their loss.

 

[DM&RDBulldog]

I would consult your tax professional to see if what you are doing is correct (there may be more information left out of the original post), I find myself not including all relative information to try to keep the post short instead of writing what I feel like is a book

Yes, much was not elaborated upon as to not have a novel.

With that said, im well aware of the line that differentiates an employee (W2) from a contractor (1099) and am within the law thanks to my wife who is an attorney. I refer to them as my guys because we are pretty much family because of how long they've been with me in general.

Simply put without a page of explanation a W2 employee has an overall cost and I just took that cost and offered it to the guys if they wanted to entertain becoming a 1099 worker and every one of them with the help of my wife if needed was able to source their own health insurance, disability insurance, and liability insurance while retaining more of their cost as a W2 employee to take home.

They also lease/rent equipment from my holdings company so they can write that off along with other expenses they would incure as a W2 employee but not be able to deduct from taxable income. They know the scope of the job and make up their own schedule with some of them working 7 days a week at times. Anything that qualifies as over time for a W2 employee I pay out to match so they are not being taken advantage of as some may think. I also make up the SS and IRA contributions all the same.

Every year my wife and I both run out all the numbers and being 1099 workers is allowing them to keep more of their money while maintaining the same or better benefits if they were a W2 employee. I also have a few less office expenses not running a payroll anymore.

Hope this clears up a bit. No one is being cheated or anything illegal taking place. I also do not work property that I dont own through my realty company so there is no risk of a 1099 worker being blamed for damage to someone else's premises and being left out to dry. I have full liability insurance on my properties ready to take care of any of my guys who may be injured while hired to work on the property. No to mention they already have their own insurance on file with me.

End of the day these guys are costing me the same rate as if I were paying out for W2 employees but retaining more of their pay to their benefit.

 

[dayexco]

you carry work comp on the 1099's? should they get hurt on the job, or hurt somebody else, do they provide their own insurance? do you request to see that insurance certificate before you let them begin? if you have no work comp, they have no insurance....and let's just say your insurance isn't adequate, the doctors and hospitals that worked on him, or those he hurt will go after the project/property owner.