Want quick IRS trouble? Give your lawn care employee a 1099 form.

Everyone is always looking for ways to save a buck or two. It’s the way of business. There are many cost cutting methods one can employee to keep their expenses in check, but when your lawn care business decides that it’s better to have independent contractors working than it is employees, you better make darn sure they are properly categorized as contractors as defined by the I.R.S. or you are in for a bruising.

Let’s start this off by hearing from an ex-lawn care employee who had enough with his employer and sounded off when he wrote on the Gopher Lawn Care Business Forum “Hi, I have worked for a lawn care company now for going on three years. The lawn care company has always had about 50 or 60 clients and the owner has never done any tax withholding, no benefits, no 1099 form, nothing. I needed a job and I did what I could to survive, that’s why I initially took it.

Now this week the company was sold to the previous owner’s best friend. I am told by the new owner I have until next Friday to sign a 1099 tax form or to find another job. In my eyes I should have had with holdings all of the last 2 years to that I could have drawn unemployment in the winter until I could find more work. This new guy is offering $11/hr on a 1099. I am a professional landscaper and operate their $20,000 equipment to service their clients on their time for their profit while they write me out a puny paycheck in which now I’m getting fired for not accepting to be 1099′ed?

Point blank I am an employee and so is every other lawn care employee in the United States of America that uses the owner’s equipment, gets orders as to when to work, and let the owner receive all the profit sitting on his butt doing zero percent of the work.

This owner is sitting back collecting a check, has his own secretary doing the billing, putting us in plain (no logo) tshirts, trying to set a sales percent in the contract that is capped at 5%, and pay us like dogs while getting these 50 or 60 yards mowed in 30 hours, and only because they’re spread throughout the entire city. He’s also demanding we get him yards that are closer together. This guy wants to have a sweat shop, sit back and eat his cake. I am going into business for myself with a small loan, and do things the right way. Screw the fat pig. I’ll whistle blow him to the I.R.S. in a few weeks when all is said in done.

Please Help Anyone?”

One lawn care business owner responded by saying “As I understand it, for a lawn service to hire a person as a 1099 subcontractor they can tell you basic instructions like what properties to service & what needs to be done either daily or weekly etc. They can not give specific instruction like what order to do the work, when exactly you need to be there etc. The specific instructions make you an employee. As an independent contractor, you must also use your own tools and equipment.

Sounds like the new owner is just looking to cover his butt & be able to claim your labor as an expense in the process. If you go 1099 that’s fine but make sure you set money aside as you will need to pay your taxes. Also as a 1099 subcontractor you may need to carry your own workers comp & liability insurance. If your going to do that, you might as well file the DBA & start your own business, then do his jobs with his equipment, & have him make the checks out to the new company name, all the while building your own customer base.

IF you are a subcontractor & not an employee, he can not tell you not to do work for anyone else. If this bothers him, then he wants to have his cake & eat it too. Life doesn’t work this way either your a sub or your not!? I use a tree company for tall tree jobs as a sub, I can’t tell him not to go trim trees on his own…. same deal. My employees however are just that, & if they wanted to start a business of their own they would be let go.”

As we have seen, some lawn care business owners like the idea of having their employees be categorized as independent contractors. They think this is cheaper for them to do but it’s going to get you into trouble. If you are considering going down this road, read this link on the I.R.S. website Independent Contractor (Self-Employed) or Employee?

From that site “In determining whether the person providing service is an employee or an independent contractor, all information that provides evidence of the degree of control and independence must be considered.

Common Law Rules

Facts that provide evidence of the degree of control and independence fall into three categories:

1. Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
2. Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
3. Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?”

When this ex-employee contacts the I.R.S. the owner or previous owner is going to owe a lot in back taxes, fines and what ever else they want to tack on. You can be sure it’s going to get ugly. So remember to make sure to categories employees as employees and sub-contractors as sub-contractors. There is a big difference. Read up on this and know what you are doing before you do it.

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The GopherHaul Lawn Care Business Show Episode Guide.
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