Contractor Talk - Professional Construction and Remodeling Forum banner
1 - 20 of 20 Posts

·
Registered
Carpentry
Joined
·
281 Posts
Discussion Starter · #1 ·
Will I have any problems with the IRS if I write checks to the owner of the company rather than the company itself when I 1099 him?

This isn't how I usually do business, just something I want to know.
 

·
Registered
Carpentry
Joined
·
281 Posts
Discussion Starter · #3 ·
I manage my own books. Guess I could just call one and ask though.

I am not really worried about getting in trouble, but rather the IRS not allowing me to expense the check or something.
 

·
Super Moderator
Joined
·
44,714 Posts
I don't think the name is as important as the tax ID number. As long as it's the same number he uses for his business that's what they want or need to see. Always remember is going to be a number, rather ìts a tax ID or in some instances you can use your social for your business.
 

·
Registered
Joined
·
123 Posts
I am not really worried about getting in trouble, but rather the IRS not allowing me to expense the check or something.
Since it is a business expense, you still get to deduct it even though you do not send out a 1099.

You should send out a 1099 to everyone you pay as a sub or rent that is not a corporation. Send a W-9 to determine this. (and $600 or more)

Exception. Lawyers should get 1099 even if corp.
 

·
Registered
Butcher of wood and metal
Joined
·
7,137 Posts
Since it is a business expense, you still get to deduct it even though you do not send out a 1099.

You should send out a 1099 to everyone you pay as a sub or rent that is not a corporation. Send a W-9 to determine this. (and $600 or more)

Exception. Lawyers should get 1099 even if corp.
I got builders I do work for that have never sent me a 1099, and I have done way more then $600 for them. Not saying it is right , just stating a fact.
 

·
Registered
Joined
·
123 Posts
They aren't following the law. If they were audited, they may/may not be fined for not sending out 1099s. Millions of people don't send out 1099s. The IRS has very little resources to catch them. Thats why they put a question on Sch C now that asks if you were required to send out 1099s.
 

·
Thom
Joined
·
4,137 Posts
You are required to send a 1099. Failing to send it will put you at risk of a penalty for not filing a 1099. You may still take the business expense.

If licensing is required and the license is for a business but you pay a person, you are employing an unlicensed contractor.

If Workmens Comp is for the business and you pay the person, you will be responsible for paying for workmens comp on the entire amount of the check.

If there is a later failure you have no recourse against the company because you did not pay the company. Any liability insurance his company might carry does not cover jobs done by and paid to him personally.

It happens all the time, the sub wants to avoid workmens comp or liability insurance or taxes generally. Doing this merely transfers costs and risk from the sub to you.

If you don't mind absorbing your subs costs, liabilities, and risks, go for it.
 
  • Like
Reactions: tsb

·
Banned
Joined
·
2,247 Posts
I know contractors who never sent anyone a 1099 (not me) and they never had a problem. I was told by my CPA that the maximum penalty a business can get for not giving someone a 1099 is only $50. Why did I ask him that question? I suppose this means the burden of the debt to the IRS is on the person that was paid the money and not the business that writes the checks.

I've been writing checks payable in both the business' name and the owner's name for the same business for many years and I don't see a problem as long as you have a receipt that backs up the amount on the check. It is not my duty to be a policeman for the IRS.

In fact, the least important thing about a check is the name that is written on it when considering you don't write names on dollar bills. Almost every day I write checks payable to businesses when the payment is for something personal. For example, I write a business check made payable to Best Buy for a television and when I do my bookkeeping I write that the check was a personal withdrawal and I write that the check was payable to myself. I often use my business checks to pay personal taxes. I change the name of the check from 'IRS' to my name. I see no problem as long as you don't do the opposite and claim that something personal was for your business.
 
1 - 20 of 20 Posts
Top