BMW M3 Forum (E90 E92)

BMW Garage BMW Meets Register Search Today's Posts Mark Forums Read


Go Back   M3Post - BMW M3 Forum > BIMMERPOST Universal Forums > Off-Topic Discussions Board
 
Evolve Automotive
Post Reply
 
Thread Tools Search this Thread
      Yesterday, 10:06 AM   #1
mccannable
First Lieutenant
 
Drives: 06 330i mt
Join Date: Jan 2012
Location: central fl

Posts: 310
iTrader: (2)

employers, employee vs independent contractor

I have a weird situation. In January I opened an auto repair shop and have been through our fair share of techs. We found one that was far better than any others we interviewed (and probably in the area) but he came on after our current tech was in a bad motorcycle accident. He came on as a temp 1099 employee. He is now going to be part of the team but does not want to be classified or payed as an employee. He refuses anything but to be paid as an independent contractor. This is good financially for us but can cause issues in the future if it is challenged and we are forced to pay back taxes for him as an employee.

What would you do? I know there are some grey areas on the 1099 side of classifications but overall he better fits as an employee. I also know a lot of techs are paid that was as a benefit to the employer(lower payroll taxes).

I have no issues with his classification as long as it doesn't come back to haunt us.
mccannable is offline  
0
Reply With Quote
      Yesterday, 10:19 AM   #2
Maestro
Captain
 
Drives: 2007 335i Sedan
Join Date: Nov 2006
Location: Philadelphia

Posts: 864
iTrader: (0)

Just went through this with my son and his company. As you probably know the Government has strict rules on what classified and employee verse a 1099 contractor.


What I know is this, if you can show they have the own insurance, and supply their own tools (which should be easy) and they set their own work schedule, and you have no direct control over their work then you should be fine. You could probably set it up cleanly that he is independent.

I was told by an accountant that employee/contractor line becomes an issue when the company has nothing but 1099's and it obviously they are not independent since they are required to work a particular schedule and the company provides them everything the need for the job.

Yes your payroll tax accounting is less complicated with a 1099, but they still have to pay all the taxes, you would have otherwise paid. The other issue is workman comp, and similar insurance for workers. With a 1099 you do not have to worry about this, but the 1099 does have to show they have coverage if it becomes an issue.

Last edited by Maestro; Yesterday at 04:17 PM.
Maestro is offline  
0
Reply With Quote
      Yesterday, 02:22 PM   #3
deeLow
Second Lieutenant
 
deeLow's Avatar
 
Drives: AW 335xi
Join Date: Jan 2014
Location: 732

Posts: 244
iTrader: (2)

Just curious, can an "employee/independent contractor" be held liable if the "employer/contractor" decides to pay using a 1099? Or is that strictly on the employer/contractor's part?
deeLow is offline  
0
Reply With Quote
      Yesterday, 03:17 PM   #4
MidwestGolfBum
Knower of all Things Useless
 
MidwestGolfBum's Avatar
 
Drives: Space Grey E92s
Join Date: Jan 2011
Location: No Coast

Posts: 256
iTrader: (0)

Quote:
Originally Posted by deeLow View Post
Just curious, can an "employee/independent contractor" be held liable if the "employer/contractor" decides to pay using a 1099? Or is that strictly on the employer/contractor's part?
Liable for what? Technically the independent contractor (1099 person) should carry insurance that will cover any and all liability that comes back to them.
__________________
Quote:
Originally Posted by MrRetep View Post
I can never have cross dressing fun nothing ever fits!
MidwestGolfBum is offline   United_States
0
Reply With Quote
      Yesterday, 05:45 PM   #5
deeLow
Second Lieutenant
 
deeLow's Avatar
 
Drives: AW 335xi
Join Date: Jan 2014
Location: 732

Posts: 244
iTrader: (2)

Quote:
Originally Posted by MidwestGolfBum
Quote:
Originally Posted by deeLow View Post
Just curious, can an "employee/independent contractor" be held liable if the "employer/contractor" decides to pay using a 1099? Or is that strictly on the employer/contractor's part?
Liable for what? Technically the independent contractor (1099 person) should carry insurance that will cover any and all liability that comes back to them.
What if it against the independents wishes?

Only asking because where I work we drive for contractors..but a few buddies of mine who work for a different contractor are paid 1099 style and they have no say against it. They drive the contractors vehicles and work set schedules..Also highly doubt they are on the vehicles insurance policy. The guy is very cheap and just interested in making money.
deeLow is offline  
0
Reply With Quote
      Yesterday, 09:58 PM   #6
Mr Tonka
Tonka.... Mr. Tonka
 
Drives: Exceptionally well :)
Join Date: Feb 2009
Location: Tampa, FL

Posts: 1,163
iTrader: (0)

Quote:
Originally Posted by mccannable View Post
I have a weird situation. In January I opened an auto repair shop and have been through our fair share of techs. We found one that was far better than any others we interviewed (and probably in the area) but he came on after our current tech was in a bad motorcycle accident. He came on as a temp 1099 employee. He is now going to be part of the team but does not want to be classified or payed as an employee. He refuses anything but to be paid as an independent contractor. This is good financially for us but can cause issues in the future if it is challenged and we are forced to pay back taxes for him as an employee.

What would you do? I know there are some grey areas on the 1099 side of classifications but overall he better fits as an employee. I also know a lot of techs are paid that was as a benefit to the employer(lower payroll taxes).

I have no issues with his classification as long as it doesn't come back to haunt us.
We paid out $1.4M last year to 1099 subcontractors. And i'm not a general contractor.

If he wants to be paid via 1099 you need him to provide the following:

He needs to create a company where he is the only employee.

You need to find and execute a subcontractor's agreement every year. This agreement will establish the tool, time schedule requirements that Maestro pointed out. Print it out every year with a new date and have him sign it.

He needs to provide liability insurance naming you as additional insured and make sure his is insurance is primary to yours. Talk to your agent. (primary so that should something happen that he's working on, his insurance would handle everything until limits are reached. THEN you're insurance would kick in.)

He needs to file for a worker's comp exemption. He works for his company, and by doing so it's ineffective to provide workers comp to protect himself from himself. Obviously, it would be better for him to provide his own work comp, but it likely won't be finically viable and difficult to find someone to write him.

He needs to submit pay applications to you for the work that he has done.

You need to pay his company for the work he has done.

Issue him a 1099 by Feb 1.

You're good.
__________________
-Joe


"Government is the great fiction, through which everybody endeavors to live at the expense of everybody else." — Frédéric Bastiat
Mr Tonka is offline   United_States
0
Reply With Quote
      Yesterday, 10:01 PM   #7
Mr Tonka
Tonka.... Mr. Tonka
 
Drives: Exceptionally well :)
Join Date: Feb 2009
Location: Tampa, FL

Posts: 1,163
iTrader: (0)

Quote:
Originally Posted by deeLow View Post
What if it against the independents wishes?

Only asking because where I work we drive for contractors..but a few buddies of mine who work for a different contractor are paid 1099 style and they have no say against it. They drive the contractors vehicles and work set schedules..Also highly doubt they are on the vehicles insurance policy. The guy is very cheap and just interested in making money.
The employer could be liable for paying all kinds of back payroll taxes and penalties should the IRS consider your buddies to be employees. You can save a lot of cash, but it's risky.

Fortunately for me, our entire industry works this way, so it would be highly unlikely for the IRS to pin something like that on me when i can easily prove that all companies like mine in FL operate the same way. Even so, you have to have all the T's crossed and I's dotted to stay out of the spot light.
__________________
-Joe


"Government is the great fiction, through which everybody endeavors to live at the expense of everybody else." — Frédéric Bastiat
Mr Tonka is offline   United_States
0
Reply With Quote
Post Reply

Bookmarks

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Forum Jump


All times are GMT -5. The time now is 04:34 AM.




m3post
Powered by vBulletin® Version 3.7.0
Copyright ©2000 - 2014, Jelsoft Enterprises Ltd.
1Addicts.com, BIMMERPOST.com, E90Post.com, F30Post.com, M3Post.com, ZPost.com, 5Post.com, 6Post.com, 7Post.com, XBimmers.com logo and trademark are properties of BIMMERPOST