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Discussion Starter #1
hello,

I'm just starting out a remodeling business and had a question. I know it's a question an account could answer but I though you guys would know.

I'll be paying alot of sub contrators for work on the jobs. Some of which are companies and some of which are individuals.

If I'm paying a painter and make the check for the job to him say John Smith. Do I need to 1099 him at the end of the year or just deduct the payment from my gross..??

What about payments to a LLC or Corporation sub.. Some of them are just 1 guy but are working under a Sub Chapter S crop or a single member LLC. Do I need to 1099 them?

Thanks for you help.

Ray
 

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There is a limit for filing a 1099, it used to be that you only had to file if you paid someone/corp over $485.00 a month. Years ago, I played this to the dollar.
Any accountant can tell you what the 'skirt' is.
 

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smartazz contractor
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You also are gonna want them to carry workmens comp or you will be paying it for the when you get the annual insurance audit
 

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sending 1099's

I would send a 1099 to every sub if you have any doubt.

It only cost a couple bucks to do and if you don't it could cost you $$$$

the only reason to avoid the max amount before you send a 1099 is so that the person whom you paid that amount is not reported to the IRS, if you have the records, for the payment (canceled check, bill, etc) you can write the bill off your taxes either way.
 

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Discussion Starter #7
I appreciate any input on anything including workman's comp. THanks

Annual insurance audit? You mean annual workman's comp insurance audit?
 

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Someone brought up WC where it was not warranted.
You file a 1099 for subs who should be taking care of their own business including WC.
If your business is audited, they will be looking for any and all infractions. Failure to file 1099's when they are due is part of the process. 1099's are at the federal level and WC at state.
 

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smartazz contractor
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Teetorbilt said:
Someone brought up WC where it was not warranted.
You file a 1099 for subs who should be taking care of their own business including WC.
If your business is audited, they will be looking for any and all infractions. Failure to file 1099's when they are due is part of the process. 1099's are at the federal level and WC at state.

General dicussion on buisness matters is warranted when the tread poster asked an additional question..........


also the law does not require self employed to carry wc on them selves but the insurance companys will require the primary contractor to cover the sub.
 

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I'm under the impression any vendor regardless of type (sole propreitor, LLC, corporation) that you pay over $600.00 in a calendar year gets a 1099. Likewise you collect a W-9 from your vendor prior to issuing the first payment.
 

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You dont have to file a 1099 upto $600, but for the record many including myself will disperse 1099's for any amount from $1-XXXXX that way i have proff in addition to cancelled checks.

1099 go out to everybody subs, LLC, S corps, C corp, partnerships/sole properietor. Just went through this with a S corp guy, I called my accountant and his accoutnant and both said to send it in.

Just be sure to get their name/address/EIN # or SSN before they work for you that way you have all the info you need to fill out your 1099 forms and 1096 to send in.

Insurance audits only affect YOU, not your subs. Your subs need to carry liability insurance to work for you, if not, dont let them on the job. Your risking your neck if something happens if they screw it up. When you get your annual insurance audit all questions are related to you/your business, what was your gross annual sales, what percentage did you pay out for labor last year, how many employees do you have.....they want to know if YOU got bigger so they can charge you more for rates with increased coverage. If you sub out alot, it makes you appear small on paper.

Hope that helps.
 

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I'm curious want an accountants reasons would be to tell you that you must file 1099s with corporations? The instructions right off the 1099 form tell you that you don't have to issue 1099s to corporations unless it is for medical or attorney fees.

Exceptions. Some payments are not required to be reported
on Form 1099-MISC, although they may be taxable to the
recipient. Payments for which a Form 1099-MISC is not
required include:
• Generally, payments to a corporation; but see Payments
reportable to corporations
on page MISC-2;


Payments reportable to corporations.
The following payments made to corporations generally must be reported on
Form 1099-MISC.

• Medical and health care payments reported in box 6.
• Fish purchases for cash reported in box 7.
• Attorneys’ fees reported in box 7.
• Gross proceeds paid to an attorney reported in box 14.
• Substitute payments in lieu of dividends or tax-exempt
interest reported in box 8.
• Payments by a federal executive agency for services
vendors) reported in box 7.


Maybe he thinks you are buying fish?
 

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LMAO....you mean you dont buy fish from your subs??? You need to get with the times brother!! ;)

They told me my check stubs were proof enough, but it did'nt hurt anything if I sent them in. Especially if it made me feel better, which it did:) Weather they decided to claim the 1099's or throw them in the trash when they arrived is their decision, I just covered my own azz since that's the only azz I care about :Thumbs: Would rather be overkill in the event of an audit then not enough.
 

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I agree with you as far as ins. audits affecting you & not your subs... but if you use subs you will have to provide records (sub-contractor audit detail sheet) for WC & liability insurance audits, including copy of certificates of insurance, contractors license number & expiration date of license for each sub if trade requires a license. If you don't have this info & documentation isn't available at the time of the audit, amounts paid to these subs (individuals/companies) may be subject to premium charges. I always require subs to provide certificates of insurance, W-9 & I check their license to be sure its current & active.
IHI said:
You dont have to file a 1099 upto $600, but for the record many including myself will disperse 1099's for any amount from $1-XXXXX that way i have proff in addition to cancelled checks.

1099 go out to everybody subs, LLC, S corps, C corp, partnerships/sole properietor. Just went through this with a S corp guy, I called my accountant and his accoutnant and both said to send it in.

Just be sure to get their name/address/EIN # or SSN before they work for you that way you have all the info you need to fill out your 1099 forms and 1096 to send in.

Insurance audits only affect YOU, not your subs. Your subs need to carry liability insurance to work for you, if not, dont let them on the job. Your risking your neck if something happens if they screw it up. When you get your annual insurance audit all questions are related to you/your business, what was your gross annual sales, what percentage did you pay out for labor last year, how many employees do you have.....they want to know if YOU got bigger so they can charge you more for rates with increased coverage. If you sub out alot, it makes you appear small on paper.

Hope that helps.
 
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