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Thread: Limited Energy 1099 Question

  1. #11
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    Quote Originally Posted by hbiss View Post
    Before doing business with any company you are supposed to give them an IRS form (I forgot which one) on which they state their business makeup as well as their TIN or SS number. You keep that form on file.

    -Hal
    The form you speak of is the Form W-9. You can download a new version that will allow you to fill out all the information other than signature with your computer.

    Even when you file the form as a corporation lots of companies will send out a form 1099 just to cover themselves. It doesn't hurt anything ( so long as your books match ).
    The 95% of people that you can't trust give the other 5% a bad name.

  2. #12
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    Thanks for the help, this is great info.

  3. #13
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    Quote Originally Posted by growler View Post

    A 1099 form doesn't have anything to do with being licensed.
    Right. In Central NY here, there is no licensing. It really comes down to if you are under the direction of someone else for your task, schedule, etc. The IRS explanation suggested reading in post #7 says something like that. Now that being said, having one's own business, license, tools, and insurance does it make it highly unlikely that the IRS would give it a second look to a 1099 issuance as fraudulent.

    Workers comp is weird. I dont understand it, but an LLC I did sub work for, said they had to pay workers comp for me. I am an LLC and do not have workers comp.
    Ethan Brush - East West Electric. NY, WA. MA

    "You can't generalize"

  4. #14
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    Quote Originally Posted by electrofelon View Post

    Workers comp is weird. I dont understand it, but an LLC I did sub work for, said they had to pay workers comp for me. I am an LLC and do not have workers comp.
    Workman's Comp is a percentage of payroll. To figure out how much you owe the insurance carrier you have to fill out a payroll audit. This covers all W-2 employees. But you also have to account for money paid to any sub-contractors. If they have workman's comp and you have the correct information on file then you are covered but if not then this is also labor that must be accounted for and paid for.
    The 95% of people that you can't trust give the other 5% a bad name.

  5. #15
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    Quote Originally Posted by growler View Post
    This is not as simple as it sounds. You ask, can one company cover another for workman's comp? If you are the prime contractor and you sub out work then the sub must provide workman's comp insurance or you will end up paying for it.

    A 1099 form doesn't have anything to do with being licensed. The IRS doesn't care how you make money but if you do make any they want their share.

    Can a licensed profession sub out to an unlicensed sub? That's up to the state authorities to decide.
    Exactly, the IRS doesn't enforce licensing of trades and professions, it only cares about reporting and payments of taxable income. For the most part you only need to give a 1099 to individuals (sole proprietor type organizations), but you can issue one to every business you made payments of over $600 to if you wish. As mentioned earlier this would also only apply to any payment you want to use as a business expense. Paying the painter for painting the rental house vs painting owners personal house was a good example of that.

    Quote Originally Posted by growler View Post
    Workman's Comp is a percentage of payroll. To figure out how much you owe the insurance carrier you have to fill out a payroll audit. This covers all W-2 employees. But you also have to account for money paid to any sub-contractors. If they have workman's comp and you have the correct information on file then you are covered but if not then this is also labor that must be accounted for and paid for.
    Gets kind of tricky at times but in general if it involved contracted labor, then the sub needs their own WC policy or other proof of their own liability, or the entity that hires them must cover them with their own WC policy. During annual auditing they do ask if there were any subcontractors and for proof of WC policies on those subs, if they don't have them, then your audited premium likely increases to cover them.

    If the person involved needs to be licensed to perform their job, that is possibly taken into consideration by WC policies, but is more of an issue with whoever governs the license required then it is for anyone else. Some AHJ's monitor insurance more then others. Here the state electrical AHJ only has a minimum general liability requirement for EC's, and that is not just to be a license holder, but if you file any permits you need to have a valid insurance certificate on file or you won't get the permit. Non licensed people on a job or not properly supervised apprentices can be asked to leave, but AHJ doesn't care about WC insurance or 1099's.

  6. #16
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    Quote Originally Posted by kwired View Post
    During annual auditing they do ask if there were any subcontractors and for proof of WC policies on those subs, if they don't have them, then your audited premium likely increases to cover them.
    That is what seems odd to me: I dont need WC in general as an LLC, but when being subcontracted, I do (or the GC needs to pay for it).
    Ethan Brush - East West Electric. NY, WA. MA

    "You can't generalize"

  7. #17
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    Quote Originally Posted by electrofelon View Post
    That is what seems odd to me: I dont need WC in general as an LLC, but when being subcontracted, I do (or the GC needs to pay for it).
    It is messed up. I do have a WC policy. It only covers employees and not myself. I don't have any employees right now, and haven't for some time now, but may again sometime. I still have WC certificates sent to those that want them, and they never question a thing, though if I am the only person on the job from my company and would be injured, I am not covered by the policy

  8. #18
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    Quote Originally Posted by kwired View Post
    It is messed up. I do have a WC policy. It only covers employees and not myself. I don't have any employees right now, and haven't for some time now, but may again sometime. I still have WC certificates sent to those that want them, and they never question a thing, though if I am the only person on the job from my company and would be injured, I am not covered by the policy
    That's probably why some of the one man shows are actually owned by the wife, and the electrician works for the company owned by the wife and can be covered by WC.
    Cheers and Stay Safe,

    Marky the Sparky

  9. #19
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    Quote Originally Posted by K8MHZ View Post
    That's probably why some of the one man shows are actually owned by the wife, and the electrician works for the company owned by the wife and can be covered by WC.

    And that's probably why the guy has to work for minimum wage.


    More than one way to skin a cat.
    The 95% of people that you can't trust give the other 5% a bad name.

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