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Hourly rate/1099 debate

Discussion in 'Business Fundamentals' started by Ozone, Jan 22, 2004.

  1. Ozone

    Ozone Member
    Messages: 49

    While this is my first year subbing out...I had quite an experience with plenty of guys who wanted to hire me. There first guy...wanted to pay me $45.00 hr with a 1099 at the end of the year. His partner and I had a deal made out for $50.00 hr with no 1099 at the end of the year. To make a long story short...they both couldnt get there stories straight and the 1 partners nose was alittle out of joint cause of the cash offer. Then the partner who made the deal with me renigged on it. Then they both stated to me...nobdy pays subs over $50 an hr period...blah blah blah.
    Well, thankfully for me...I have 2 different friends who own there own Landscaping business...Plus I know atleast 10 other guys who are either landscapers or plowed for many many years.
    I asked them what the going rate was for subs in our area. I got anywhere from...$50.00 an hr - $90 an hr.
    Now some said..."it depends on what blade you have" etc.
    Id say the majority said...NO 1099 for there subs....what does the rest of the board do?
    My dads buddy was using me for $70.00 an hr(cash) until he played a few games with me. I think Im gonna ride out the rest of the winter puddleing around doing my own thing until next year. next year..i wanna get a few small commercial lots( 2 of them) and be done with it. Im not trying to make a living off snowlowing..just a few extra bucks to spend. What are your thoughts?
     
  2. stackitslamit

    stackitslamit Junior Member
    Messages: 9

    we 1099 all sub work. Why should i pay the taxes on the money that someone else is making. also all sub must carry liabilaty insurance with my company named as additional insured.

    paying cash will bite you in the end.
     
  3. Plow Meister

    Plow Meister PlowSite.com Addict
    Messages: 1,174

    1099's here. Yet another reason to be a sub. Every March, I have to spend an entire day totaling numbers and getting 1099's ready for delivery next January. Then I have to pay the business taxes. Woah!!!! Gets bigger every year.:help:
     
  4. apkole

    apkole Member
    Messages: 75

    All of our subs get a 1099. All of our subs have some of their own contracts as well. All of our employees get a W2. All income for the business goes through the books, all wages are documented. When it comes time to sell this business (around since 1964) I have a well documented picture for the prospective buyer to present to his lender. Keeping the books straight has given us a tremendous amount of leverage with our lenders when purchasing property, equipment and supplies.
     
  5. John Allin

    John Allin PlowSite.com Addict
    Messages: 1,327

    Guys who don't 1099 you are not operating honestly.... stay away from them. You'll eventually get burned. If they get caught, the trickle down effect isn't worth the trouble for you.
     
  6. Ozone

    Ozone Member
    Messages: 49

    stackitslamit said:

    "paying cash will bite you in the end."

    Someone paying me cash never bit me in the end.I dont know who you have been dealing with. Im not the person asking for cash. But by all means..if someone offers it..I most certainly wont turn it down. Its just like...if your a Bartender..do you report all the cash you receive as tips?? Of course you dont! But if Im correct you must report 10-20% of it.
    Anyways, I guess I didnt explain it correctly what i was trying to say....@$45.00 an hr..and maybe working 10 hours per snow storm with a 1099...just isnt worth it to me. I mean after you take taxes out...gas..etc. Is it actually worth the hassle and wear and tear on your truck?? I dont think so. That is why I asked around to see what the going rates were for subs in my area. I definatley understand that..the contractor hiring me is there to make money off me and thats fine...he has every right to do that. But, I see alot of people on this site stating the samethings I just stated as far as..how much they are worth and wear and tear on there truck. I also understand we all live in different areas so, the cost of living and prices are different in each area. So basically, I guess I just answered my own question....get my own accounts.
     
  7. JMR

    JMR Senior Member
    Messages: 567

    I do it by the book. 1099's to any sub making over $600. IRS rules. W2 for all employee's. Trust me if you have ever had an IRS audit you'll be thankful if you're playing it straight. I give every sub a 1099 explaining what they do with is up to them, but at least my butt is covered. If I don't 1099 them then I would have to pay tax on the money they earned.

    To the subs out there. Accounting is an art form. The amount of tax you pay is up to you. Knowing what you can & can't deduct will help you operate your plowing business as a profitable in your pocket, yet on paper as a, not for profit business. A good accountant can help you find a way to do this and stay within the law. Spend a few dollars to save a bunch(its tax deductible). There is a big difference between tax evasion and tax avoidance.
     
  8. GripTruk

    GripTruk Senior Member
    Messages: 374

    Glad you mentioned that. That's what I thought it was. I worked a job in 2003 (different business) for $600... I gave them a 3 dollar discount, hopefully that gets me out of a 1099 from them. If not... oh well :)

    -Jer
     
  9. Nebraska

    Nebraska Member
    from Midwest
    Messages: 32

    You certainly can't be for real about giving a $3 discount? It takes how long to print one out...maybe 3 minutes total if you include the 1096 to show all the 1099's.
    Ozone..you will either get burned working for cash or you'll never make it too far. My advice is to leave it up to the professionals who are making a living on snow & ice.
     
  10. GripTruk

    GripTruk Senior Member
    Messages: 374

    Huh? print one out? I would get a 1099, not give one. I gave the company I worked for a discount so i charged $597 instead of $600, Therefor I won't have to pay tax on that $597.

    About Ozone, the one thing I will say about "leaving it up to the professionals" is that that just doesn't exist around here. There is not nearly enough snow to constitute a career, it is strictly a side job or a small aspect of a another business, such as landscaping. But, I agree, while it may be tempting to work for cash, in the long run, you are better off going legit.

    -Jer
     
  11. OBRYANMAINT

    OBRYANMAINT PlowSite.com Veteran
    from ohio
    Messages: 534

    at that 600 dollar mark is when they must send you a 1099...they still report your income under that ......just that they are not required to send out the form...
     
  12. Nebraska

    Nebraska Member
    from Midwest
    Messages: 32

    Won't have to pay tax on that $597??? Is that all you made from all income sources? You definitely need to find a tax advisor.
    Obryanmaint is correct....that is just the threshold for sending a 1099. Any subcontractor in our system that is paid even $1 is written off as subcontractor expenses. Even before they are allowed to work for us they have provided verifiable proof of insurance(with out it when we are audited (for isurance) we end up having to pay liability and comp on them) and have provided us with either a SS# or a Federal EIN#.
    In the end if you are working for an illegimate contractor eventually things will catch up with them as well as all the illegitimate subcontractors they use.
     
  13. gpin

    gpin Senior Member
    Messages: 390

    If the 1099 is an issue, you shouldn't bother to be in business. You can write off any number of related items so don't sweat the details. Find a genuine outfit to work for, start off at a reasonable rate, do a good job and you will have all the work you need.
     
  14. Murf67

    Murf67 Member
    Messages: 38

    i WAS SUBBING FOR $75.00 BACK IN THE 80'S!!!!
     
  15. Ozone

    Ozone Member
    Messages: 49

    Nebraska wrote>

    "Ozone..you will either get burned working for cash or you'll never make it too far. My advice is to leave it up to the professionals who are making a living on snow & ice."

    Are you implying that so called "Professionals" have never received cash before? Hmmmm...LOL

    Anyways, I'll most definately pass on your advice Nebraska...What consititutes a professional at snow plowing? For your information, there are some here on this board who do not depend on Snow Plowing for a living...Im one of those people. For your information, I have a thriving Plumbing&Heating Company. There are alot of people who who chose to buy snow plows to make alittle bit of extra cash. Last time I checked, there is no crime committed and...my prices are right with the so called "Professionals".

    It would be correct for me to say..."leave it to the professionals" in my skilled trade for the simple reason you need 5 Years of Schooling and a License in order to operate as a Plumber. I thought I would throw that out there for food for thought.
    I have given the same type of "High quality" service to my select few customers as the rest of you on this board give your customers.Business insurance?? Yep..sure have that as well. So what makes you any different then me? Not to take things out of stride but...you really have no place sitting here on a message board judging me as a "Contractor" as I wouldnt do the same to anyone else. Everyone operates differently and thats what makes the world turn my friend.

    Since I started this thread, things have gotten taken out of context. I asked a question and it was turned and twisted to make myself look like someone who cheats the tax man.
    Bottom line is..I find it very hard to believe that...if a customer handed you $35.00 cash...your gonna report it.
    Plus, I think its kind of silly and immature to sit here and talk about who's "professional" and who's not. Nobody has the right to judge another person. Were'nt we all taught that.."God created everyone equal?"
    Im just here to chat it up with other people who snowplow and ask questions and have fun. I think sometimes people tend to forget why we are even here.
     
    Last edited: Jan 28, 2004
  16. Nebraska

    Nebraska Member
    from Midwest
    Messages: 32

    Ozone....
    You leave me :rolleyes:
    Are you sure you want to debate this one and open yourself to the comparison of your profession of plumbing to snow and ice management? Do you really want to go into the actual factual reasons why plumbing is such a regulated "profession".?

    Yes, God did create everyone equal...in the beginning.

    Sorry your Dad's buddy played a few games with you. Good luck "puddleing" around for the rest of the winter. Maybe your Brother's only Uncle's Brothers' buddy could find you some lot to plow and not "play" you?

    Maybe I'll go solder a few pipes, install a few water lines, and clean out a few drains for some extra bucks and just be done with it. All the while keeping my prices in line with the "professionals". What the heck...no one has documented a case of someone loosing their life over faulty plumbing.

    What do you think? Sounds like a plan to me!:D :D :D
     
    Last edited: Jan 28, 2004
  17. Plow Meister

    Plow Meister PlowSite.com Addict
    Messages: 1,174

    Nebraska, Chill out :rolleyes:
     
  18. Ozone

    Ozone Member
    Messages: 49

    One word..Ignorance!!
    One day you will get a clue and figure it out. Debating with you, when you have no education about my field, would be to my advantage.
    Anyways, I'm moving on from this thread since ignorance has gotten the best of you and some others. I dont need to come to a message board to get in an argument. I proved a point and sometimes sour grapes are hard to handle for some people. Good Luck...LOL:waving:
     
  19. Nebraska

    Nebraska Member
    from Midwest
    Messages: 32

    The only point that you have prooven is your ignorance. LMAO!!:D
     
  20. ratlover

    ratlover PlowSite.com Addict
    from IL
    Messages: 1,325

    You really want to cases showing deaths and property damage from faulty plumbing contractors? Edit: or even a good contractor that had a laps of judgement or a break of concentration for a sec.......

    yup, its tax evasion if you get caught J/K :D

    Very good point :nod: