1099

[K8MHZ]

I just can't believe how different the 1099 rules are viewed by some, many trades do issue 1099's for workers, I would not want to pay their their comp insurance payments, or leave my business in a constant audit position 1099 away!

The difference is justified as the rules vary from state to state.

In Indiana, since I don't need to be licensed, I could legally do work and get paid with my income being reported via 1099.

In Michigan, since I need a license to do electrical work and the rules say I must be paid by a licensed contractor as a 1040 employee, I could not do any 1099 work under my license.

IF a person is a licensed contractor AND a licensed journeyman or master, he may legally be paid 1099 income so long as the billing is done in the legal name of the contractor. For example, Joe's Electric, a one man show, can get paid 1099 compensation. Joe Shmoe, the one man in the one man show, could NOT get paid the same way. Instead, he would have to get an employee check with all the goodies taken out from Joe's Electric made out to Joe Shmoe.

The rules for auto mechanics are very similar. I owned a licensed repair facility and was a licensed master mechanic (automotive and marine electrical systems specialist) here for a decade or so. I could bill as my business and get a 1099, but it was illegal for me to bill just as a master and get a 1099 as the master had to be a 1040 employee of the company.

I remember the first time I wrote myself out a paycheck and signed both sides and cashed it. It was ironic and rewarding at the same time. Ironic in the fact that I did all the work and finally got the dough, but to be legal I had to play musical bank accounts which detracted from my take as I did not have a way to charge myself for the extra paper work and math I had to do and make that work contribute to a positive cash flow in order to get my own money from myself.

But, if I didn't do it that way the state would have closed my business down and pulled my license. Since the licensing structure is even more strict for EC's, with permits and all, I would hazard to think that the state would be just as vengeful for EC's as they are for auto mechanics.

 

[rodneee]

I just can't believe how different the 1099 rules are viewed by some, many trades do issue 1099's for workers, I would not want to pay their their comp insurance payments, or leave my business in a constant audit position 1099 away!

the reason there are so many views regarding 1099's is because each party tries to play it (legal or not) the way that best suits them best. there are specific IRS guidelines regarding who must be on payroll, which by law supercede, any state laws. i have had workers leave me to work elsewhere because they think being a "1099 employee" is a legal way for them to work without paying taxes. and i know competitors who think sending someone a 1009 relieves them of payroll taxes. I would love to 1099 everybody including my dog but in 95 % of the cases it is illegal as sin.

 

[yucan2]

The difference is justified as the rules vary from state to state.

In Indiana, since I don't need to be licensed, I could legally do work and get paid with my income being reported via 1099.

Just curious. Where in Indiana do you not have to be licensed. We recently got licensed in Merrillville, IN and just like Illinois, we were told we must be licensed in every little sink hole of a town that we choose to work in?

 

[satcom]

the reason there are so many views regarding 1099's is because each party tries to play it (legal or not) the way that best suits them best. there are specific IRS guidelines regarding who must be on payroll, which by law supercede, any state laws. i have had workers leave me to work elsewhere because they think being a "1099 employee" is a legal way for them to work without paying taxes. and i know competitors who think sending someone a 1009 relieves them of payroll taxes. I would love to 1099 everybody including my dog but in 95 % of the cases it is illegal as sin.

You are looking at it the same as I do, many do not really understand the 1099 and all the issues related to using it, it appears we may have a lot of side work guys on the site, and most of them do not have an established business, or all the related expenses.