1099 or payroll as an S-corp?

[beastboy]

I will be hiring employees this year and an unsure on how to handle their pay. As an s-corp is there benefits of one over the other in reference to 1099'ing an employee(sub contractor) to setting them up on a payroll. I know a 1099 would be a whole lot easier.

 

[Mr.X]

what kind of an employee is it?

You can't just decide for yourself, you have to follow IRS rules when deciding on employee status (which includes independent contractorship).

Mr.X

 

[help4john]

You're right! Forwarding 1099's by Jan. 31 places the tax burden and filing on the employee. Through payroll, the employer witholds the taxes, etc. S-corps are the best for personal and practical ownership if for nothing less than the liability factor. Why make it harder on yourself having a payroll process? 1099's are simple.....total the amount paid for services for the calendar year, type it on a form, and forward to employee. Easy as it gets.....with no liability or responsibilities on your part.

 

[beastboy]

what kind of an employee is it?

You can't just decide for yourself, you have to follow IRS rules when deciding on employee status (which includes independent contractorship).

Mr.X

What do you mean what type?

 

[help4john]

I was presuming that you were trying to decide upon hiring as an employee or independent contractor. Employee=benefits, taxes, and w2's, contractor=monthly or semi-montly payment and 1099. Hands down....hiring staff as contract staff is the easiest for the business owner. Also easier to replace if they do not work out....hopefully you wont have this problem.

 

[beastboy]

It's a seasonal job for my workers...I'd prefer just to hire them as a contractor.

 

[help4john]

It's a seasonal job for my workers...I'd prefer just to hire them as a contractor.

Good idea. Saves you the headaches!

 

[Synpax]

It's really not up to you - ideally you would 1099 them, but you may not be able to depending on what the law recognizes as an employee. Talk to an accountant or read some of the documents yourself.

Your status as an S-corp is irrelevant to this issue.

 

[Spartacus]

you don't match FICA and medicare deductions on a 1099-misc employee
of course you don't deduct from them either
I 1099 a couple,casual labor and/or independent salespersons

 

[help4john]

It's really not up to you - ideally you would 1099 them, but you may not be able to depending on what the law recognizes as an employee. Talk to an accountant or read some of the documents yourself.

Your status as an S-corp is irrelevant to this issue.

I don't believe any laws determine employee vs. contractor. This is determined prior to acceptance of the job and negotiations on the part of the employer. S-corps are common ground for contractors. Some examples are found in service industries such dance studios, karate centers, and the like. The instructors are typically contract staff and not employees. Makes sense from the S-corps standpoint.