question on working with GC's

[B4T]

This time it is the GC who gets the estimate.. it is HIS customer. Better to let him make money of you here before he needs electrical work on his house "when you have time." Always good to not owe anyone for getting you work. Seems a THANK-YOU doesn't cut it anymore.

 

[bradleyelectric]

I agree with what Cadpoint is saying. Talk to the GC and find out what % he marks your bill up. I would not let it be over 10% that way you know what is being presented. If you were to do $10,000.00 worth of work for this GC in a years time he will 1099 you for $10,000.00 and you can take it from there with your deductions. Let the GC worry about his own profits and taxes. Just keep up with what you billed him and what you received to compare it to the 1099 at the end of the year. If you bill him for $11,000.00 ( 10,000.00 + 10%) he could 1099 you for the $11,000.00 and say he gave you a $1,000.00 in cash. No way to prove he didn't. He has you bills. That will leave you paying tax on his 10%

It's not up to me what someone marks my number up. Just because someone has a bill from me doesn't mean they paid it. If he doesn't have paperwork as in a canceled check, bank statement with a check to me, or a receipt it didn't happen.

 

[ceb58]

It's not up to me what someone marks my number up. Just because someone has a bill from me doesn't mean they paid it. If he doesn't have paperwork as in a canceled check, bank statement with a check to me, or a receipt it didn't happen.

OK, prove it. That's the mind set the IRS will take.
I had a CG 1099 me for more than what he actually had paid. It was up to me to prove the point. Luckily for me the GC's accountant was helpful and found they had picked up on a bill twice. They filled out the correct paper work and gave me a revised 1099. It was still APITA.
All I am saying is bill for what you have done and dont try to plug in the GC's cut. If the GC adds 10,15 or 20% let him worry about it.

 

[goldstar]

I never presented a bill as a sub contractor that covered the GC's Cut. (including any business terms of accouting you might won't to include)

I'm trying to understand your point of view. Who would you be presenting the bill to ?

I was an expense to any project, and I know that was covered by the cost of the job,

Just to clarify, your services are considered a cost of the sale (i.e. total price for a GC's particular job is $10K, materials and services for that job is $6K, gross profit is $4K). Your services are counted in the $6K cost of sales. Now the GC has expenses to run his business (i.e. office expenses, gas, electric, etc.). Once he pays those expenses he is left with net profit on which he pays taxes. If you're lumping expenses with cost of sales, the end # is the same and I guess we're in agreement.

My arguement is, "IF" The EC will be billing 1000.00 theres 1K on the Books,

The EC is not billing $1K, he's billing $900.00

How do you show 90.00 or any amount of payment in accounting terms on this,

$900.00 gross income, or total labor and materials. There's no need to break out labor and materials on your P & L statement.

A smart GC is the Biller, he doesn't show his subs numbers is my point here.

OK. I'll buy that.

The EC can't use
Gross profit - Expenses = Net income. Till they recieve their money.

That is correct. You should be on a CASH basis for your accounting and not an ACCRUAL basis (i.e. you recognize your income when when you receive the check)

Let me put it another, maybe I've said it already no Sub is going to bill for a Prime or GC, or better yet anyone that brought you in
where a Prime - sub relationship is under stood, this will not happen.

I think we're in agreement but I'm not sure why. Please understand that I'm not attacking you or your way of doing business. I'm just trying to get us both on the same page with respect to generally accepted business practices.

 

[goldstar]

If you were to do $10,000.00 worth of work for this GC in a years time he will 1099 you for $10,000.00 and you can take it from there with your deductions.

The way I understand the issuing of 1099's (and please correct me if I'm wrong) is that if you are a sub-contract employee to another contractor (GC or EC) and you are only providing labor then you should be getting a 1099 for your services. However, if you are providing both labor and materials you shouldn't be getting a 1099. Is this correct ?

 

[ceb58]

The way I understand the issuing of 1099's (and please correct me if I'm wrong) is that if you are a sub-contract employee to another contractor (GC or EC) and you are only providing labor then you should be getting a 1099 for your services. However, if you are providing both labor and materials you shouldn't be getting a 1099. Is this correct ?

No, the contractor sends me a 1099 for the amount of money I have received from him during the year. This amount is what I have billed. It is then up to me to list the deductions material,labor and associated expenses with doing the jobs. This would then be my profit and what I would pay tax on. There is not such a thing as a sub contract employee. The way the IRS looks at it is if the "employer" tells some one how and when to preform the work, and directs their activity in doing the work that person is a bona fide employee. The employer then must pay tax, SS and other items. I am a sub contractor the GC dose not direct my work or tell me how to preform the task he has hired me for.

 

[petersonra]

The GC is your customer, not the HO.

 

[petersonra]

The way I understand the issuing of 1099's (and please correct me if I'm wrong) is that if you are a sub-contract employee to another contractor (GC or EC) and you are only providing labor then you should be getting a 1099 for your services. However, if you are providing both labor and materials you shouldn't be getting a 1099. Is this correct ?

Normally, corporations do not need a 1099 to do work, regardless of how payment is made.

is you business not incorporated?

 

[goldstar]

Normally, corporations do not need a 1099 to do work, regardless of how payment is made.

is you business not incorporated?

I am an LLC (Limited Liability Company) I chose to go that route rather than Sub-Chapter S Corp.

The only time I've received a 1099's is when I've done electrical sub-contract work for another EC. Since I've been in my own business (1994) and billed out for labor and materials in a lump sum price I have never received a 1099 from a GC. I don't know if I'm doing something wrong or if the GC is doing something wrong but whatever I've billed for under my company name I've declared as revenue. COGS and expenses are deducted from that to determine my net income on which I pay taxes. It doesn't matter whether the GC sends me a 1099 or not, I've declared the income. If the GC gets audited he will have to show that I billed him for X amount of $$. On the other hand my records are up to date as far as what I've billed out and collected.

So, getting back to the OP, if I sent out an estimate for $1K but billed and received $900.00, my gross revenue is $900.00 and not $1K. If I sent out an invoice for $1K showing a contractor or courtesy discount of $100.00, essentially I've billed for $900.00. Anything wrong with that ? :-? Please say so.

 

[petersonra]

I am an LLC (Limited Liability Company) I chose to go that route rather than Sub-Chapter S Corp.

The only time I've received a 1099's is when I've done electrical sub-contract work for another EC. Since I've been in my own business (1994) and billed out for labor and materials in a lump sum price I have never received a 1099 from a GC. I don't know if I'm doing something wrong or if the GC is doing something wrong but whatever I've billed for under my company name I've declared as revenue. COGS and expenses are deducted from that to determine my net income on which I pay taxes. It doesn't matter whether the GC sends me a 1099 or not, I've declared the income. If the GC gets audited he will have to show that I billed him for X amount of $$. On the other hand my records are up to date as far as what I've billed out and collected.

So, getting back to the OP, if I sent out an estimate for $1K but billed and received $900.00, my gross revenue is $900.00 and not $1K. If I sent out an invoice for $1K showing a contractor or courtesy discount of $100.00, essentially I've billed for $900.00. Anything wrong with that ? :-? Please say so.

I think if you are an LLC no 1099s are required. Its still a corporate entity.