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Do I need a tax I.D. number to issue 1099 forms to prople that do security work for me? |
i am an individual being contracted to provide security for a company, i am not a company and do not have a tax I.D. number and i do not want to get stuck paying all of the taxes after paying out the persons that will be working for me. do i need to obtain a tax I.D. # in order to 1099 these persons or what other route could i go so that the taxes are taken care of properly? If you are being contracted by another company, and are not considered an employee of that company, then you are operating as a self-employed individual. Since you said you haven't set up an actual company, I'm assuming you are reporting your self-employment activities on Schedule C. You do not need to obtain a separate ID number. You can use your Social Security number instead. The only difficulty here is guaranteeing that the people you are hiring underneath you are indeed contracted employees, and therefore subject to receive a 1099-MISC and pay their own payroll taxes in the form of self-employment tax when filing their tax returns. You will also end up paying self-employment tax on your net income from the business itself. You would not be responsible for payroll taxes IF they are truly contractors. The rules governing "who is" and "who isn't" an employee are rather lengthy and are often contested. If someone you've hired gets upset when it comes tax time that they're paying self-employment taxes (15.3% of what they earn from you on top of their federal taxes), and decide to try to say they were actually employees, you'd better have all of your ducks in a row and be able to prove otherwise. The most important thing when it comes to this is whether or not you "control what will be done and how it will be done." If you're hiring someone to do security, and this person is in business for themselves, comes in and does their job in the way they've set out to run their own business, then yes, you can issue them a 1099. However, if they report to you each day and you assign them what to do during the day, and dictate how it will be done, then no, they are an employee of yours and you are responsible for withholding and remitting payroll taxes. Just make sure that you address this issue. It might be a good idea to draw up a contract with each person, detailing that they are contracted individuals and are allowed to operate as they have been in other contracted situations. Hope this helps! Source(s): work in taxes :-) www.irs.gov Although you do not have a "tax I.D.", you are in business as a sole proprietor and operate under your SSN. You either should obtain the tax id of the company (llc, inc., etc) of the agency you are contracting work out to or the tax ID (SSN) of the individual so that you can report the income paid to the IRS. Probably best to pay the fee of a good tax accountant to work this out for you...and deduct the business expense against your income. Good Luck! If people work for you and you pay them you should have an Employer Identification Number (EIN). That number is used to report your employee tax (SS, Medicare, ect). It is most likely that you will be a sole proprietor when you file your income tax and use your SS # on a Schedule C. Given you level of understanding of this subject it would be advisable for you to consult with a tax professional before you get very fare into this adventure. |
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