what are the pros and cons of employing a manager as a 1099 employee. are there legal ramifications that prevent this? it will lower expenses but there must be reason this route is not followed.thanks
Here’s a big ramification: independent contractors aren’t covered by workers comp. So if they get hurt on the job, they can sue you.
No insurance agent or CPA will see that as a good idea, so basically they all need to be employees. The only people who think that managers should be 1099s are people who have never spent the money to get an informed opinion from professionals.
Thanks for feedback, employees it is.
You can google 1099 qualifications and all the requirements by the IRS.
It’s short sighted for a business owner to think they can get away without paying the payroll taxes.
Brian … The question was more about education. I assumed a logical reason existed as it does not appear to be the practice (I am working to close on my first park by year end).I have worked as a 1099 employee and it worked out great for me.
Very generally, a 1099 independent contractor is supposed to be “independent”–he sets his own hours, uses his own tools, follows his own policies, has other customers, has fewer duties of loyalty. The only thing you get a say in is the end result. That’s the type of relationship you have with your barber, your lawyer, your plumber. Now, when you start telling someone “come in to work from 12:00 to 3:00 Monday through Thursday, here’s your computer which you’ll use to keep track of things for me, you’ll live on my land, and here’s a list of procedures you need to follow,” that’s a different type of relationship–that’s your employee. Both the Department of Labor and the IRS see things roughly this way, and whenever there’s a grey area they both lean heavily towards an employer/employee relationship.
Dean, Don is correct. An employee reports to you and works under your direct supervision carrying out specific orders. An independent contractor is given general instructions and fills in all the blanks at his own discretion. Also, independent contractor status is a ‘flag’ to the IRS to look closer at returns. I doubt if there is much difference in smarts between the two; experience yes, smarts no. You’re far better off to have an employee who wants to do the right thing and wants to learn and grow rather than a rocket scientist independent contractor who knows everything. And every employee needs to be covered under WC, not just a portion or percentage or group leader as is the case in some construction trades.
Jim Allen