What he said may be legally correct (and I guess that`s the role of a lawyer – to look at the subject exclusively from the point of view of the law), but to sign a contract without intending to abide by the agreements it contains simply because “it won`t hold up,” seems dishonest at best. Did you know that you probably have independent contractors, whether or not you have therapists working for you? Now, I made a video about it last year, but I wanted to talk about it again, because it can be a big problem with the IRS if you don`t spend 1099s on people who qualify as independent contractors. and ignorance does not deny this. According to the IRS and the Ministry of Labor, an independent contractor is any person or company that provides goods or services to another company. This doesn`t necessarily mean just massage therapists and other professionals who work for you or offer services through your business, such as those who rent rooms and the like. This means anyone who works for your company, who is not an employee. In accordance with tax laws, you must provide a Form 1099 to all independent contractors who pay $600 or more in one year. And since they see all the individuals, partnerships, LLCs, limited partnerships, and discounts who work for your business as independent contractors, those are a lot more people than you probably realize. Let me be a little clear.
Let`s say you`ve hired a graphic designer to create marketing materials and great things for you. If that person is an individual contractor, LLC, or other corporation and you pay them $600 or more for that design work, you need to issue them a 1099 come Tax Time. The same applies to any goods or services provided to your business. If you`re not a business and you pay them $600 or more in a year for things they do for your business, then technically they`re an independent contractor and you need to give them a 1099. That means you have to let her fill a W-9, doesn`t it? It is actually the way the government makes us all mutually responsible for covering all of our income. I think it`s a bit ridiculous, but on the other hand, I think it`s also the biggest tax legislation, so I`m just going to keep silent on this issue. In any case. There are several exceptions, but it can be a bit confusing, so please consult a professional tax professional to make sure you keep things on the pre-up.
I will mention one big exception here. If you pay them by credit card, you don`t have to worry about those 1099s, as credit card payments are already lower than their revenue ratio. But if you pay them with a check or cash, you must in any case issue these 1099. . .