Subcontracter info

T

treewhisperer1

Location
Decatur, Georgia
Decided last week to start working as subcontract climber/arborist. There are several small companies I have worked for in the past that said they would definately hire me on regular basis as a subcontract climber. So got liability insurance and individual health policy,and was wondering if anyone had some input on how they arrange things with people they work for as a sub.
For instance:
do you just show up at jobsite or drive their vehicles?
Do you charge by the day or hourly?
Do you have a minimum charge?- only have three or four hour job that day.
Have people sign something in writing?

Any imput would be great, what has you experience been with the subcontract thing?
 
Go to the jobsite. It shaves time off your day. Not to mention there may be insurance problems if you were to get in an accident in their vahicle.?
Charge by the day. Be it 1hr or 8,same money.Give an hourly rate for anything over 8 hrs. but don't be a d**k about it. In my experiance you"ll be done early more often than working late.
A good ol' handshake always worked for me.
And what ever you do, DO NOT pick up a rake, you'll ruin it for the rest of us. /forum/images/graemlins/tongue.gif
 
Re: Subcontractor IRS definition

I have been told many times by climbers that they are 'independant contractors'
The IRS has certain definitions to determine this.
If any one or two definitions do not meet their criteria, the IRS will disallow the tax filing
(and we all know what that means, right?) AUDIT TIME!

I posted a general brocure published by the IRS as an attachment.
Here are a few of the 'rules of 10' the IRS goes by:

Telling the worker to show up at a certain time or day.
-You can provide a list of jobs to do BY a certain date in time, but not specific days or times

Providing the main equipment in order to finish the job.
-the worker MUST be able to start and complete the job on their own.
this rule can be vague and will be interpeted various ways by the IRS agent. For example; an independant contract climber COULD come in and prune various trees, and you as the prime contractor could then come in later and chip the brush.

- Being the main contact/interface between the customer and the independant contractor.
Not providing the independant contractor the specific names, addresses and contact information of the customer means that you (as the prime contractor) are directing the independant contractor without any autonomy on the part of the independant contractor, and thus this person is indeed an employee

Anyways their are many ways around tax evasion and I would encourage all tax paying folks who are thinking about being an independant contractor to go into it with a clear understanding of the consequences and requirments the IRS imposes.
Frans
 

Attachments

Re: Subcontractor IRS definition

Very few of the climbers I've heard of meet the IRS requirments for an independent contractor.

For instance..........ground crew. If the ground crew works for the company you are subbing for........you are not a sub contractor, you are an employee.

If you show up at the job because the crane is sceduled for that day.......you are an employee, not a sub.
 
Re: Subcontractor IRS definition

Even for a guy running business as a LLC?

What about payroll taxes and such, as an independent, you submit an invoice, you dont take payroll.
To legally be an empployee, the employer has to have SS # on file, none of my contractors have my SS #, so how can I be an employee
 
Re: Subcontractor IRS definition

[ QUOTE ]
Even for a guy running business as a LLC?

What about payroll taxes and such, as an independent, you submit an invoice, you dont take payroll.
To legally be an empployee, the employer has to have SS # on file, none of my contractors have my SS #, so how can I be an employee

[/ QUOTE ]


Weather or not you have filed the paperwork is irrelevent to the IRS. The fact still remains that you are acting as an employee as defined by the IRS's rules and regs.
You may, or may not be caught.
If you are caught you will be forced to pay what the IRS figures you owe.
This could mean a tax lean for the years you did not pay.
A tax lean means your credit is ruined. No loans for a house for example
frans
 
Re: Subcontractor IRS definition

Well Im certain that wont be a problem,I pay all my taxes on all earned income whether it be my work or work as a sub. Fact is probably only 10% of my income comes from subbing the rest is from my business. Whether I meet the defintions or not I pay all my taxes, and they cant tax me twice, besides Im sure I pay more taxes now than I would if i were considered someones employee
 
Re: Subcontractor IRS definition

I'm not sure Frans is right about this. There is a long list of criteria that define a sub, and as I understand it the IRS will look at how closely you adhere to the list--i.e., you may not meet every point on the list but if you meet enough you will be a sub. One of the biggies is that you do not receive more than x% of your income from a particular company. Another is that you use your own tools. If I am to help a company as a sub with a removal and they are pulling three other people together to make the job happen (crane, groundies, etc.), it isn't really practical to demand I get to pick the time and method of completing the job. What if the client insists on a certain day for the work? One day a year does not make me an employee; maybe the technical definition of the IRS says otherwise, but common sense does not.

Having said that, I may be wrong. I am not a lawyer and sometimes bureaucracy and common sense fail to cooincide. My best hope probably is that I am such a small time operation that they won't find it worthwhile to go after me.

k
 
Re: Subcontractor IRS definition

[ QUOTE ]


I am not a lawyer and sometimes bureaucracy and common sense fail to cooincide. My best hope probably is that I am such a small time operation that they won't find it worthwhile to go after me.

k

[/ QUOTE ]

You and I seem to be in the same boat. While I own and run my own business, I also do work for others on occasion. I hope to remain 'under the radar' for those times I do work for others.
What helps me, is in CA. you must have a contractors license to contract for any job over $300. So using my own tools, truck, chipper etc, on someones elses job, along with being licensed and insured, means I am a subcontractor even if I do show up on the day requested. (I hope)
And I PAY a boatload of taxes
Frans
 
Re: Subcontractor IRS definition

The biggest bugaboo that the IRS can throw at you is the "Stautory Employee" rule. You may very well be an independent contractor but if certain criteria are met then they consider you an employee under the law.

Also, as for not having your SSN, I hate to break it to you but if whomever subs you pays you over a certain amount per year (I think it is $600 and some) then they are obligated to file a 1099 and will need to have your SSN, EIN or TIN, depending on how you are organized, on file.

Then the IRS still has the data and might look closer and still call you a statory employee. Essentially, as long as you are not corporation or partnership there is no real fool proof criteria you can point to and say "I'm a Sub."

The IRS is intenitonally vague. If the outfit that subs you controls when, where and how you do the work then they would technically employ you no matter how many other people you sell services to.

The IRS does understand that when multiple subs are brought in on a project, ie crane, heavy dozers, &riggers, sometimes there must be coordinated scheduling.

They also look at whether you have signed sub-contractor agreements. Do those agreements have stiff penalties for breach of contract? Who pays your insurance? Are you hourly? Are the contracts worded based on finished job as opposed to specifics on how to accomplish the job.

As you can see there is a lot to consider, alot that the IRS won't tell you and a lot you'll end up gambling on.

About the only way to avoid the Statutory Employee/employee problem is to incorporate or form a partnership. I understand that forming an LLC will also help you like incorporating but am not 100% sure.

Tho I hate to suggest it, it might be worth $150 to see a lawyer to help you set up your business to the best advantage.
 
Re: Subcontractor IRS definition

That was what i was getting at...

I mentioned noone has my SS # because iI am incorporated, thus they get my Fed tax ID # instead. And as a sub I also show up with my own insurance, my own comp policy, and all my own tools.
And most of the time, I show up or the work is scheduled when it works for me due to my schedule. I am not hourly, but charge a daily rate and am paid that amount whether I work 1 hour or 8. I have a very good accountant, and Im sure the little bit of sub work I do IS considered sub work.
 
Re: Subcontractor IRS definition

I have never had a problem w/ the IRS. It is the insurance companies you have to watch out for. Workmans comp is the big issue around here. As long as the IRS gets their money they won't bother you.
 
Re: Subcontractor IRS definition

One thing we I do here to help with the problem of the Inland revenue rules (very similar to your IRS rules) is, when working as a sub climber woth another company, to never submit an invoice for a days work but to word is as job done. This implies that your getting payed a fixed amount for completion of your task and not a days wage.

If you agree 200 a day for climbing thats fine but invoice it as 200 for felling a tree a whatever you've done. Then you can also invoice 150 for one job and 250 for the next and keep varying the amounts so it doesn't look like your on a fixed daily amount.
 
Re: Subcontractor IRS definition

[ QUOTE ]
That was what i was getting at...

I mentioned noone has my SS # because iI am incorporated, thus they get my Fed tax ID # instead. And as a sub I also show up with my own insurance, my own comp policy, and all my own tools.
And most of the time, I show up or the work is scheduled when it works for me due to my schedule. I am not hourly, but charge a daily rate and am paid that amount whether I work 1 hour or 8. I have a very good accountant, and Im sure the little bit of sub work I do IS considered sub work.

[/ QUOTE ]

Sorry, that I missed that you were in corporated....

That being the case, then there is NO 1099 and NO Statutory Employee risk because they are hiring the Your Company and your Company is carrying you on its books as an employee or officer. And it is your company's responsibility to account for your wages in whatever form they may be.
 
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