EMPLOYEE or 1099 – You Must Know the Difference

IRS

(Hendersonville / Asheville)

DISCLAIMER: My 26 years of experience says, there are quality individual housekeepers out there. I should know…….I’ve trained some of them. However, this message strictly addresses the ramifications of 1099 vs employee, and not the quality of work!

Everyone knows that the IRS does not mess around when it comes to “the money”, and this year, one focus of their scrutiny is the cleaning industry. So let’s just jump into this mess! remember….If it looks like a DUCK, walks like a DUCK, Quacks like a DUCK,….it’s a DUCK!

1099 Example: you hire a plumber to fix a leaky water line in your home…….1099. Why?? Simple.. plumber tells you when they will arrive, brings his / her own tools, has own general liability insurance, workers comp insurance, assesses the problem, gets the correct parts, takes a lunch break, fixes the problem, cleans up (hopefully), gives you a bill, takes another break (just a little plumber humor), leaves. 1099 (you contributed nothing except payment)……..1099, Your tax obligation is zero -0-. You contracted a professional service.

W-2 Example: you hire an individual housekeeper to clean your home……part-time employee. Why! You control the day they come? You control the time? (but I gave them a key….ok, so if you gave a key, you can also take key back, you control…see duck quote above); You control the work area; You control the acceptable quality of work; You control the chemicals to use (but they bring their own chemicals…..ok, and you’ve never said….use my Murphy’s on the floor…duck quote above); You control the tools to use (use my vacuum, use my towels, use my duster….duck quote above). If they have their own workers comp and general liability, that is huge and helps tip the scale to 1099)…….. but WITHOUT insurance and control, This is definitely your EMPLOYEE.

NO-ONE LIKES THE IRS:

If you deal with a business: the business carries the insurance and the employees belong to them

If you hire A housekeeper: this is YOUR EMPLOYEE. YOU are required by IRS to pay all employer taxes and file all required monthly, quarterly, and yearly reports (remember duck quote).

Hope this helps!