The 1099 rules apply to the employees who do not fall under the rules of normal employment. The perfect example of the employee for 1099 rules are the contractors which are independent. Instead of getting paid by the company and being directed by them also, the contraction works over his own guidance.
There is no one over the head for the 1099 employee. The employee is able to follow his/her own guidance to operate the business.
Example of 1099 Rules
The best example for 1099 rules is that if you hire someone to do the paint of your house. Once the job gets done, that person will no longer be your employer. It is like the contract they work on regarding their profession.
Once their job is done, they move to another employer to find their profession related job for some time. They keep on moving around according to the nature of their job.
Not Permanent Job
If you are looking for someone who works with your permanent then 1099 rules do not apply for them. It is not the right rule for them if you want the employee who can work with you permanently. Working as a traditional employee does not come under the 1099 rules.
Importance of 1099 rules
The importance of 1099 rules is because of the taxes. When you have the contractors hired with you, you are able to get less burden of taxes on you. The contractors have to measure their own taxes so there is no responsibly over the employer to file the taxes for them.
When you have employees who do not fall under the 1099 rules, you have to pay the taxes regarding such as the SSN, Medicare, income tax and unemployment tax as well. You also have to deduct the taxes out of the paychecks of the employees. It is better to have clear classification of 1099 rules to avoid any trouble from the IRS.
Approach for Employees
If you are not sure what to do regarding the 1099 rules and how to approach the employees then it is better you hire a tax preparer. A professional tax preparer will be able to provide you the solutions which you need apply correctly.
It keeps you away from falling into the trap of mistakes due to which you would have to pay huge amount of money to IRS. It is better to determine the classification at the right time otherwise, you would not be able to handle the charges easily if made by IRS.
Things to avoid
Prefer not to consider someone under the 1099 rules if as an employer, you have to offer training programs for them. The training programs which can help them improve in their job. Do not consider the employee under 1099 rules if you have to provide the material and the tools to do the job.
Schedule Timing
Another thing to avoid is that if you have to provide a specific schedule of time. Last thing to avoid for 1099 rules is that as an employer, you have to offer the benefits like traveling, vacation hours and more.
For the employees of 1099 rules, they are not designed to accept all these factors which are mentioned above. If you have to provide all these to an employee, then consider him/her under the traditional employee rule rather than the 1099 rules.
No Restrictions
The employees who are able to work on their schedule without any restrictions, have their own material, able to refused jobs and use their own methods to get done with the jobs are the ones who fall under the 1099 rules. There are many examples related to 1099 rules employees like writers (freelancers), plumber, painter, electricians, truck drivers and more.
Filing for Taxes
For the employers who follow the 1099 rules, they have to file the taxes under the form of 1099 MISC. Know that you will be charged with huge amounts of charges if you are not able to do the classifications clearly. If you have the opportunity to get the contract in a written form from the 1099 rules employees then it would surely be a protection for your business.
You can always contact the professional tax preparer to do the work for you if you are not able to make the decisions. Filing can be confusing but a help from professional will never harm you.
