Home Improvement Contractor - Licensed Contractors

My husband and I have a small drywall business but now have a large job - How do taxes work?

Here's the deal. My husband is a full time carpenter but has been laid off since Sept 2008 but we have a very small drywall business on the side. Since he's been laid off he's been trying to pick up more work. He has been awarded an addition for a house from a General Contractor. I guess my question is we now be employing 3-4 guys can we just 1099 the guys? Any help and suggestions would be helpful. Thanks you

Public Comments

1. ok
2. Get a tax software to double check----I would just 1099 your employees.
3. sure, if the employees will go for it...Are there any stipulations in the contract that you carry insurance. You'll need workman's comp...and its expensive
4. 1099 forms, or Information Returns, are tax forms used to report income, other than the standard wages and tips found on W-2 forms, to the United States Internal Revenue Service. 1099 forms are to be filed by any businesses, organizations, corporations, estates, charities or individuals who perform financial transactions. Most 1099 forms cover financial transactions occurring within a given year (January 1 to December 31), and are filed with the IRS at the beginning of the following year. 1099 forms can be filed either by mail or electronically, although businesses that issue more than 250 forms a year are required to file electronically or magnetically. There are a variety of 1099 forms covering a vast array of financial transactions. The most commonly used 1099 form is the 1099-MISC, which is used by independent contractors, who are also referred to as freelancers. Regular employees have Social Security and Medicare taxes deducted from their paychecks by their employer. Companies who hire independent contractors are not required by law to make these deductions. The IRS requires that the independent contractors report their income and use the 1099 form to calculate the taxes they owe.
5. No - you can not just 1099. If you are truly employing 3-4 people you need to check with an accountant, There are taxes you must collect and pay to the state you reside in. Whereas all other tax areas can be postponed until year end or to specific dates for reporting, payroll taxes are the taxes where collection and reporting and payment must be done on time every time.
6. Ask the General Contractor if he supplies the liability insurance and workers comp insurance. You may be reponsible for those. Also be sure that you give the GC an Invoice for your services. Sub contractors can be given 1099's. Be sure to have them give you an Invoice before you pay them. This will ensure they are truly working on a subcontractual basis and not as employees. You most probably will have to purchase Worker's comp insurance, which typically will run you $500 - $1000 a year. Most large jobs require this, but not because you actually have employees. Call any insurance company for quotes. Sub contractors also should sign a Waiver of Liability, which you can get from any lawyer. Also be sure to have General Business Liability insurance.