Contractor Success Map with Randal DeHart | Contractor Bookkeeping And Accounting Services
0186: When Being A Licensed Contractor Is Not Enough
This Podcast Is Episode Number 0186 And It Will Be About When Being A Licensed Contractor Is Not Enough
When You Hire A 1099 Contractor They May
Actually Be Your Unplanned Employee!
Having a contractor’s license is not proof enough you are a business versus an employee. If you hire a 1099 Contractor (Specialty or Trade Contractor), they just become your employee in the eyes of the tax agencies.
When you hire 1099 contractors, you need to know that their state contractor’s license, bond, and insurance are active. If you are doing construction work in Washington State You can start here https://fortress.wa.gov/lni/bbip/Search.aspx
When a being a licensed contractor is just not enough!
During audits state, agencies are now looking to check about the bond and insurance. Anytime a contractor’s license is suspended the state may reclassify that person as an employee on your jobs.
Contractor's License Suspensions Are Computer Generated
Did you mail your renewal to the wrong mailing address? Did you send your liability insurance payment in late? Did you forget to renew your bond?Suddenly just like any other employee you owe Worker’s Compensation, State and Federal Unemployment.
Depending on your state’s (wage & hour law) that may not be a big deal and you may only incur nominal fines, penalties, and interest. Some states are more friendly and easier to work with than others.
The common factor is they are all concerned about tax revenues and unlicensed construction contractors.
Ask Yourself These Questions Regarding Your Subcontractors Are they bringing employees to the job? Are they bringing heavy equipment? Why do you if you are just going to 1099 them?Because all fifty states are working with other agencies looking to be sure employee rights are covered and the state, local and federal payroll taxes are paid.
As an employer among your responsibilities are these:
Pay workers’ compensation Meet wage and hour requirements Pay unemployment tax Maintain a safe workplaceWashington State Labor & Industries has several definitions to decide whether or not the contractor you hire is really a contractor or an employee and here are a few:
Supervision Do they perform the work free of your direction and control? Separate Business Do they offer services that are different from what you provide? Do They Maintain and pay for a place of business that is separate from yours? Do They Perform services in a location that is separate from your business or job sites? Previously Established Business Do they have an established, independent business that existed before you hired? Required Documentation May includes other customers or advertising.IRS Taxes: When you entered into the contract, was this person responsible for filing a tax return with the IRS for his or her business?
Required registrations: Are they up-to-date on their required local, county, State, and Federal business registrations?
Ask your State's Department of Revenue if their business license is active. If they are a construction contractor, check their contractor registration and license.
If they have employees, check their workers’ compensation account and claim history. In Washington State, you can do it through The Department of Labor And Industries.
Do They Maintain A Useful Contractors Bookkeeping System: Do they maintain their own set of bookkeeping records dedicated to the expenses and earnings of their business?
Note: If you plan to treat your worker/subcontractor as an independent, make sure you can prove they are. For your protection, you should always ask the person you are hiring to show you proof otherwise you could be liable for all of their employee taxes and all of the employer taxes plus fines and penalties.
Steps We Recommend For Construction Contractors Who Do Not Want To Have Employees.
Keep your business licenses and registrations up to date. Washington State Licenses http://www.sos.wa.gov/corps/corps_search.aspx Washington State Department of Revenue https://fortress.wa.gov/lni/bbip/Search.aspx Washington State Labor & Industries https://fortress.wa.gov/lni/bbip/Search.aspx Washington State Resellers Permit saves money and increases cash flow: http://www.fasteasyaccounting.com/blog/?Tag=Resale+CertificateMarketing To Prove you are actively engaged in acquiring new customers. Be Proactive and market your business. Join a Trade Organization, Chamber of Commerce, set up a Facebook page. Add your business listing to other social media sites and add your business contact to the bottom of your emails.
You must have more than one customer to not be considered an employee.
Maintain Contractors Bookkeeping System which means do they or someone else maintain their contractor's bookkeeping system dedicated to the expenses and earnings?
Today more than ever, it is necessary to have a properly setup QuickBooks file and maintain it. Someone with the knowledge and training combined with an understanding of construction to perform a QuickBooks Set-Up for construction, Clean-Up, Tidy-Up and Update QuickBooks. Do you have 941 or Sales Tax Issues? If so we can help.
As The Contractor You Are The Most Important Employee http://www.fasteasyaccounting.com/blog/bid/168849/You-Are-The-Most-Important-Employee-In-Your-Construction-Company
Please Note: We work with the following company types: Sole Prop, Partnerships, LLC's and S-Corps. No matter which company structure you choose to be, we are here to support your contractors bookkeeping services needs.
As Part Of Best Practices: It is in our Opinion the best company structure for active contractors is an S-Corp. Making "A Profit" and Having Real "Money Left Over" is how you are able to the things you want to do in life.
In Construction, Good Bookkeeping Is more than entering the receipts into QuickBooks For Contractors.
We start where you are: We help “A Little” or “A Lot” depending on the individual needs. We take a shoebox, file box and all the receipts hidden under the seat, & turn them into useable data.
When we are done, your QuickBooks will create easy to understand year end reports for your tax preparer to complete the annual tax return.
We also provide on-going services www.fasteasyaccounting.com/bookkeeping-services-more-detail
Customized reports hold many answers to the WHO Questions – Who Owes Money To Whom? Who is your Best Customer? Is your #1 Favorite Customer adding / taking profits or cash flow?
What does that mean? We handle the paperwork, and you handle your money. We help with the details so that you can focus on the management tasks that only you can do. What should you do- Estimates / Create Billings / Collect From Your Customers / Deposit The Money / Pay The Bills
Along the way – we help with item lists, detailed customer invoicing (pay apps) and job costing.
Summary: We work from the first dollar in on January 1st to the last dollar spent on December 31st and all of the transactions in between from Customer Invoices, The Bills Paid, Reconciling Bank Statements, Credit Card Statements and knowing what to look for on your Vendor Statements. Client access to QuickBooks is optional.
The Next Step Let’s Chat! http://www.fasteasyaccounting.com/chat-with-sharie/ Looking forward to helping you...(even if it’s just listening) I can be reached at 206-361-3950 (9-6 PST)
About The Author:
Sharie DeHart, QPA is the co-founder of Business Consulting And Accounting in Lynnwood Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on how to manage the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. http://www.fasteasyaccounting.com/sharie-dehart/ 206-361-3950 or sharie@fasteasyaccounting.com
I trust this podcast helps you understand that outsourcing your contractors bookkeeping services to us is about more than just “doing the bookkeeping”; it is about taking holistic approach to your entire construction company and helping support you as a contractor and as a person.
We Remove Contractor's Unique Paperwork FrustrationsWe understand the good, bad and the ugly about owning and operating construction companies because we have had several of them and we sincerely care about you and your construction company!
That is all I have for now and if you have listened this far please do me the honor of commenting and rating podcast www.FastEasyAccounting.com/podcast Tell me what you liked, did not like, tell it as you see it because your feedback is crucial and I thank you in advance.
You Deserve To Be Wealthy, Because You Bring Value To Other People's Lives!I trust this will be of value to you and your feedback is always welcome at www.FastEasyAccounting.com/podcast
This is one more example of how Fast Easy Accounting is helping construction company owners across the USA including Alaska and Hawaii put more money in the bank to operate and grow your construction company. Construction accounting is not rocket science; it is a lot harder than that and a lot more valuable to construction contractors like you so stop missing out and call Sharie 206-361-3950 or email sharie@fasteasyaccounting.com
Contractor Bookkeeping Done For You!
Thinking About Outsourcing Your Contractors Bookkeeping Services?
Click On The Link Below:
This guide will help you learn what to look for in outsourced construction accounting.
Need Help Now?
Call Sharie 206-361-3950
Thank you very much and I hope you understand we really do care about you and all contractors regardless of whether or not you ever hire our services.
Bye for now until our next episode here on the Contractors Success MAP Podcast.
Warm Regards,
Randal DeHart | Contractors Accountant
Our Workflow Removes Your Paperwork Frustrations
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