If John Doe accepts your credit card as payment for a bill for $432, his credit card processor will send him a 1099 at the end of the year which includes this $432 as part of the total of all charges processed. The 1099 will be issued under whatever tax id or ss# the business used at the time they signed up for the processing service.
Everybody wants to get their fingers in this pie. Texas has a big issue with determining whether someone is paid as an employee or independent contractor and a pretty lengthy list of rules to define the difference. If they can establish that you don’t meet the criteria as an independent contractor, the person paying you has to pay Texas Workforce fees which go into the unemployment tax fund.
Some cities require you to get a dba and pay a license fee and business taxes, Houston loves their money from this source. Banks require dba documentation as well as a tax id# for a business account. My bank treats business accounts for a sole proprietor as both a business and personal account so I can deposit checks to and from both the business and my name in the same account but I don’t pay any fees because I qualify for no fee banking as a business account.
It does get a little crazy trying to sort through all the city, county and federal regs and the Franks-Dobbs fiasco didn’t make it any easier.
It’s getting so complicated to operate a business..it’s ridiculous.
Thanks for addressing the contractor vs employee issue.
We have required our contractors to fill out a W-9 for years or we simply won’t use them. If we don’t have one on file we are required to withold tax and remit to the government “on their behalf”. What company in their right mind wants to be in that position? Companies have probably increased the requirement due to OCare regs (temporarily put on hold) that ANY vendor used will be required to have a 1099 issued to them. Individuals, corps or vendors that sell supplies. Don’t ask me what that has to do with OCare.
Then...our workers comp carrier is requiring that contractors we use carry their own w/c policy or we are penalized.
Geez..I feel sorry for small contractors. I also feel the pain of companies that are trying to exist within the confines of the “rules” of state, federal and companies that they have to answer to.