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Old 10-05-2015, 11:24 AM
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Contractor for the entire year: 1099 or W2?

Hello,

need some help on defining the contractor worker. So I have a contractor working for me the entire year. I paid him every month and at the end of the year I give him a 1099-MISC.
Someone just told me that is not correct. If he works for the entire year, I should put him on the payroll.
My question is am I doing the right thing or not?

Any advice will be appreciated.



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Old 10-06-2015, 01:07 AM
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Not really however, I should say it depends; it is NOT correct to say,” If he works for the entire year, I should put him on the payroll.” Basically, it is critical that you, as a business owner, correctly determine whether the workers providing services are employees or independent contractors.In general, the worker is not an independent contractor if he performs services that can be controlled by you, an employer ,what will be done and how it will be done. This applies even if you are given freedom of action. What matters is thatyou as an ER need to have the legal right to control the details of how the services are performed.



On the contrary, if you can control what will be done and how it will be done. This is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed. the IRS is more likely to classify as an employee aslongas he can be fired at any time ;is paid by the hour ; receives instructions from the company ;receives training from the company ;works full time for the company ;receives employee benefits ;has the right to quit without incurring liability, and provides services that are an integral part of the company’s day-to-day operations.if it is still unclear whether a worker is an employee or an independent contractor can be filed with the IRS. The form may be filed by either the business or the worker. The IRS will review the facts and circumstances and officially determine the worker’s status



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Old 11-05-2015, 12:52 PM
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I'm kind of in the same situation. I'm self employed consultant and have set up and LLC to do business under. Right now the LLC has a contract with a client to provide 1 resource(me). I work at the client site's to and provide whatever consulting they need. I want to add another consultant under my LLC that can provide services for the client, but don't know if I need to classify him as a W-2 employee or 1099 contractor.

The term of the contract I have with the client is 1 year or less. The additional resource I bring under contract will not be managed or trained by me and will work directly with the client. He can independently operate based on what the client wants and just provide me the the hours he worked. I do think he'll be billing 35-45 hrs/week.

I would think I could classify him as a 1099. But am not sure about the 1 year thing and because he is working basically full-time, if he is still a contractor in the eyes of the IRS. What do y'all think?



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Old 11-05-2015, 05:53 PM
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Quote:
Originally Posted by villybhakta View Post
I'm kind of in the same situation. I'm self employed consultant and have set up and LLC to do business under. Right now the LLC has a contract with a client to provide 1 resource(me). I work at the client site's to and provide whatever consulting they need. I want to add another consultant under my LLC that can provide services for the client, but don't know if I need to classify him as a W-2 employee or 1099 contractor.

The term of the contract I have with the client is 1 year or less. The additional resource I bring under contract will not be managed or trained by me and will work directly with the client. He can independently operate based on what the client wants and just provide me the the hours he worked. I do think he'll be billing 35-45 hrs/week.

I would think I could classify him as a 1099. But am not sure about the 1 year thing and because he is working basically full-time, if he is still a contractor in the eyes of the IRS. What do y'all think?
I'm kind of in the same situation. I'm self employed consultant and have set up and LLC to do business under. Right now the LLC has a contract with a client to provide 1 resource(me). I work at the client site's to and provide whatever consulting they need.========>Same situation UNLESS you are hored as a reg W2 EE by the client, you are an IC, a self employer.As said basically, whether you are an independent contractors or a W2 EE depends on the facts in each case. The general rule is that you are an independent contractor if the clinet has the right to control or direct only the result of the work and not what will be done and how it will be done. However, You are not an independent contractor if you perform services that can be controlled by the client , for example, what will be done and how it will be done. This applies even if you are given freedom of action. What matters is that the employer has the legal right to control the details of how the services are performed.

I want to add another consultant under my LLC that can provide services for the client, but don't know if I need to classify him as a W-2 employee or 1099 contractor.=====.another consultant under your LLC can be either a reg W2 E or a contractor; it deepens. I mean as you can see, you may hire the another consultant as your regular EE or an IC.

The term of the contract I have with the client is 1 year or less. The additional resource I bring under contract will not be managed or trained by me and will work directly with the client. He can independently operate based on what the client wants and just provide me the the hours he worked. I do think he'll be billing 35-45 hrs/week.=======>So, UNLESS he issues you a [email protected], you are not a reg EE; If it is still unclear whether you are an EE or an independent contractor, Form SS8 can be filed with the IRS. The form may be filed by either the client or you. The IRS will review the facts and circumstances and officially determine your status.
Be aware that it can take at least 6 months to get a determination, but a business that continually hires the same types of workers to perform particular services may want to consider filing the Form SS-8


I would think I could classify him as a 1099. But am not sure about the 1 year thing and because he is working basically full-time, if he is still a contractor in the eyes of the IRS. What do y'all think?======>As said above.



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