“I started doing foreclosure cleanup and got my EIN number, not sure if even needed. I have 2 people that have worked with me from day one.”----> You will need an EIN if you have EEs; you operate your business as a corporation, LLC(SMLLC/MMLLC) or a partnership;so, If your business structure takes a form other than sole proprietor you are required to have an EIN. It's safe to say that any business that has employees and/or pays any kind of taxes will need a federal tax ID.
“When I go to do my taxes can I 1099 them?”---->I guess it depends; you need to issue 1099s to your EEs as long as they are classified as subcontractors. A subcontractor is a person or a company hired by a general contractor to perform part of the work of a construction job. For example, a contractor might be building a house, but might hire a firm or a person specializing in electrical engineering to install the electrical systems needed in the house. Generally the subcontractor will either relieve the main contractor of part of the building work, or will be able to perform. You need to issue a 1099 to anyone who provides services and you pay them $600 or more over the course of the year. However, if they are a corporation( S- C corp) you do not need to issue them a 1099. In general, anyone who performs services for you is an EE if you can control what will be done and how it will be done. An employee is a person who works in the service of another person under an express or implied contract of hire, under which the employer has the right to control the details of work performance. The you need to issue then W2s and need to withhold their taxes, FICA taxes, Fed and State from their paychecks.
Those who need help deciding if their workers are EEs or independent contractors can fill out Form SS-8.
Last edited by Wnhough : 02-04-2012 at 01:44 PM.