Short instructional video by Donna Bordeaux (campgroundaccounting.com) explaining how to classify and pay independent contractors in a campground/business context. Core points: use the control test to distinguish contractors from employees (example: landscaper), treat work campers as employees, always collect a completed W-9 before payment, collect certificates of insurance, prefer card/merchant payments to avoid issuing a 1099 (contractor instead receives a Form 1099‑K), and issue required 1099s by January 31. The speaker offers accounting help via her site.
Chapters
Hi there. I'm Donna Bordeaux with campgroundaccounting.com I wanted to talk to you today about 1099s, everybody's favorite topic. As we get to the middle of the year, people stop and they kind of forget about that lovely time of the year when they process their 1099s. But really, now is the time to think about it. It should always be a process in your place so that you don't have to worry about this come January. So when these forms are due, first, a 1099. Who is a 1099, who is a vendor that is an independent contractor. First we look at control. Control is the biggest factor that determines if someone is a 1099 vendor for you versus an employee. So in a 1099 situation, that person should not be under your control. Basically, you're not telling them, hey, work from nine to five. And here are the things I want you to accomplish. Here are the things I want you to do. Here are the tools to do your job. You should be providing very minimal impact on how it is they complete the task. Think of this in terms of a landscaper who comes out to your site. You might tell him you want a new raised flower bed, or you want him to clean up some things or trim some trees. You don't care what equipment he uses, how long it takes. Well, maybe you do care about how long, but you don't care about the process that they use. You're really caring about the results that they will achieve, and that's what you're paying for. You don't care if he brings one guy, five guys, 10 guys, what kind of machinery he uses. You just want the job done. That is the true definition of what a 1099 vendor looks like for you. A lot of controversy about work campers. I'm here to tell you, work campers are not 1099s folks. They are truly employees. So. So the faster you get that under control and move that situation so that you minimize risk, the better off you are. And if you don't believe me, talk to your insurance agent. There's a lot of things you have to worry about if you're treating work campers as 1099s. So I'd be happy to help you move out of that situation and get those folks on payroll so they can truly be paid the right way. All right, back to 1099. So I gave you some guidelines as to who is a 1099 contractor. Now, how do you make that time of the year when you have to issue those 1099 forms a little bit easier. First off, I'm here to tell you not a dime without the W9. Alright? Again, not a dime without the W9. The W9 is the form that you'll use to request that your independent contractors fill out and provide you with the information you'll need to complete their 1099. I'd always suggest getting an email address with that too. That'll make things a whole lot easier when it comes to delivery and save you on some postage. The W9 will request that they tell you the legal name of who you're paying. And by the way, that should match what's on the check. Always write the check out to the same name that's written on that W9 to protect yourself. It will also give you their W9 address as well as their federal ID or Social Security number. So get that before you issue any payments at all. It will resolve a whole lot of problems. Also, I highly suggest that you collect certificates of insurance from each of your 1099s. You'll find that when you go through a workers comp audit, you have to pay the workers comp if they don't have their own. So collect that certificate of insurance and save yourself some problems when that time rolls around for a workers comp audit. Next up, how should you issue the payments? When you do issue payments, I will tell you there is one secret way to never have to issue a W9 or a 1099 and that is to pay via a form of credit card or some form that will go through merchant processing. So whether that's PayPal, whether it's paying them by a credit card, they will receive a 1099k from their merchant provider which is already linked up to their federal ID number. And that's how the IRS tracks to make sure that they report their income appropriately. So if you Pay only via PayPal or credit card, you're off the hook. You don't have to issue the 1099. Yay. All right. If not, if you're still writing checks like the old days and oh please don't pay by cash, always at least use a check. If you're paying by check, you're going to have to issue that 1099 at the end of the year. You don't want to be tracking people down. So make sure you got that W9 on time on file before you give the check. They're very motivated to give you that form if the check is coming because they sign off on that. So make sure that happens for you and make sure that you issue those 1099s appropriately by January 31st. All right? And we're here to help. If you need help issuing 1099s or deciding if someone should be a 1099 versus an employee issue, we're here for you. Check us out@campgroundaccounting.com Thanks.
