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Work is slow for us now and next week I will be going to work for a local flooring installer on a custom trim job.
He will be paying me as a sub and I will be responsible for my own taxes.
Is there any thing else I should be aware of or responsible for?
This is my first time doing this so any advice or input would be greatly appreciated.
Thanx in advance!
Mr.T
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Replies
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Tony, you need to get liability insurance in case you put a nail through a wire which causes the house to catch on fire, etc...300K to 3M or 6M coverage, depending on where you work.
Expect a 1099 (instead of a W-2) next year. You will have to pay a self-employment tax on these wages, which is twice the amount that would have been withheld for social security as an employee. Keep receipts or records of what he pays you...1099's seem to often be a little off...in the other guy's favor.
He should have workman's comp to cover subs...you shouldn't need it yourself.
Soon to join the ranks of employeedom,
Mike
*So, how much money you got?Are you insured? Liability, W/C, disability, etc.Any licenses required? Occupational, State licensing?Does your price for the job actually include enough $$ for you to be a sub? Wage, plus all of the above, material, profit and overhead, TAXES and oops?Are you in charge? Actually setting your own work hours, methods, dealing with the customer?This has been covered, in detail, in other threads and the installer is looking for a way to avoid acting like a proper employer.If this is a one-time shot, what you are doing is practically an under-the-table type of arrangement.
*t... you should ask about the WC.. i don't cover my subs, in fact i require a Certificate of Insurance from them to prove they have Comp...in some states (like RI) you can carry comp on yourself if you are an employee of the corporation...which i am, so wether i'm working for myself or subing to another company i've got comp & liability
*Tony - Don't overlook what Mike mentions about 1099s and taxes. They can be brutal if you make a lot of money this way. In Illinois, you're taxes on self-employed income are: 28% federal income taxes, 15% social Security, and 3% state income taxes. That adds up to 46% - Almost half your income.
*T. One more thing to keep in mind if your subbing, write offs. Whenever I do this kind of work I keep every receipt and bit of mileage on my truck that I can. I burned myself hard working on 1099's. Didn't plan on being there long it just seemed to happen. Be very careful working on a 1099 hourly or piece meal.
*If you are truly a sub and not just an employee he is hiring on the cheap you got a whole raft of things you gotta know and do. But if you are really an employee you are getting into a real mess.Difference? Mainly it is who controls work schedule, how the job is done(sub="there it is, do the job, no supervision" employee="there it is, supervision"). But check it out with the IRS or your State Labor Board. It is really, really important you get it straight right up front.Lots of people want to call someone a sub when they aren't because that shifts costs to the "sub" and there isn't a very good chance they will get caught at it. But is really screws the fake sub.
*I don't agree Fred. If the "sub" is later found to be an employee, the "employer" gets screwed. There isn't any risk to the employee. All of the back taxes and penalty come from the employer.It's a great place to be...getting "cash" on 1099 that later becomes the "net" income of an employee. I'd recommend it to everyone!blue
*I don't think this has been mentioned yet, but the employer could pay you as an employee through a payroll service and you won't have to worry about any of the issues that have to do with working as a sub.If the only way he will pay you is as a sub then you can expect him to withhold money because you don't have liability insurance, the additional tax work is likely to cost nearly as much as you are likely to make on a small job, and your net profit to be so small you will wonder why you got up in the morning.
*blue:You couldn't be more narrow in your perspective. While it is true that for federal taxes the employer gets to pony up that is the least of the problems. There is the liability/insurance problem that includes injury to self and others, workmanship claims, and so on.There is also the matter of the rest of your taxes other than income taxes.If you are a sub you need to think in terms of being a businessman. That means being licensed and insured as such. It also means having a handle on your costs and billing at a profit as we have discussed so many times in this forum.Businesses like fake subs because they pay less than what their total employee cost would be and play the odds that they won't get caught. So the sub/employee gets some quick cash but in reality is subsidizing the contractor.
*Fred, you couldn't be more marrower in your view.I don't know what that means, but I thought I'd throw your name in front of it, since it's probably a compliment.Anyways, I disagree again. If the "fake sub" is found to be an employee, the burden of worker's comp and liability is passed from the shoulders of the employee and place squarely on the shoulders of those that are the employers. Ultimatly, the property owner is responsible. In the final analysis, the employee is exonerated of any wrong doing. The burden of proof is laid on the money man, the employer trying to skirt the law. I believe that the IRS uses a test that involves twenty some questions to determine whether a payee is a sub, or employee. It takes a sharp legal mind to avoid the trap laid by the IRS. It's far better to just take out the taxes.I know of two people that were bankrupted/financially ruined by IRS rulings in this matter.blue
*shezaam blue,u keep fast company..what stories..u must know thingsfugg'n irs..there's an outfit!So r u in the "youth of old age?"damn if only i were younger in the info age!what about mr. T..a sub..jes lika dat..whats he chargin? wait a second..that aint enuff..double it!yer gettin now!
*Danny boy... uze beeen hangin out wid Mikey too mach...Whutz wid da accent...near the stream headin north for a load of kinndling,aj
*aj.. ders no gee in kindlin....
*Juust slipped into my Adirondackhack voice fer a bit...Now...I am really gone...See yaa!upstream,aj
*There's a fine line between what the IRS, L&I and various other government agencies consider a "sub contractor" and an "employee", too. Even if you're lisenced and bonded, if you do a certain percentage of your billable work for one contractor (for some reason I want to say 38%) you are an employee in the eyes of these agencies. Take the time to find out the laws in your state. Golden rule of building - "don't play games with the taxman".
*licensed
*How the heck do you remember that one? I ALWAYS stop and change it a couple times.
*Danny boy likes Mike. He makes sense. Didya see my flame on you AJ..in the other thread?You joked about the sub having "alzheimers".. not good. A good thing for us, and you, would be to not make distasteful jokes with mental illness as the butt.Next time I go south to work I'll buy you a real beer. I cut accross on 149. Bring the dog. Peace,Dan-Obut hey, whadda I know
*Crazy Legs,I never can spell lisensced either. Don't understand it....Rich Beckman
*I sure hope no one gets incensed over it.
*I like the smell of incense!!
*Easiest way to remember is to call it lickense. Then you can remember that there is no s in the first part. Just a thought...James DuHamel