From a legal standpoint, you should be providing W2's to your drivers. As states above, 1099 are for independent contractors. It would be hard to convince the IRS he is a true independent contractor when the driver drives your equipment.
Here is the IRS's 2 cents.
http://www.irs.gov/Businesses/Small...ependent-Contractor-Self-Employed-or-Employee
Facts that provide evidence of the degree of control and independence fall into three categories:
Easiest thing to do it use a payroll service. You don't need incorporation although you may want to incorporate. Incorporation has nothing to do with how you pay your employees. A payroll service will take out necessary taxes for you and file w2's. You can also use form ss-8 to determine for sure weather you have an employee or independent contractor. http://www.irs.gov/pub/irs-pdf/fss8.pdf
- Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job? (dispatching)
- Financial: Are the business aspects of the workers job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.) (Tools and equipment are provided by company)
- 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? (You may not have any of these as a small business, but certainly might as you grow)
Wanting to hire drivers. Need advise!
Discussion in 'Ask An Owner Operator' started by 256 logistics, Jan 11, 2014.
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