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Hi and welcome to Just Answer!
We are trying to figure out if they are considered self employed or if we need to 1099 them as independent contractors... Could you possibly help explain the difference and what you would classify them as?
In determining whether the person providing service is an employee or an independent contractor, all information that provides evidence of the degree of control and independence must be considered.
Facts that provide evidence of the degree of control and independence fall into three categories:
1. Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
2. Financial: Are the business aspects of the worker’s job controlled by the payer? (These include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
3. 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?
If they are employees – you are required to pay at least minimum hourly wages (under your state labor laws). If they are self-employed contractors – that is their responsibility to account and report their taxable income. As long as you do not pay them – you do not need to issue any tax form.
We get paid from them by charging them an hourly rental fee, just as a beauty salon or as a stripper, who pays the house to work ... how would we classify that income? Just as an hourly rental fee or something else?
Generally – that is an income of your social club – regardless how that amount is determined – as rental fees, hourly fees, or just a flat rate - it should be reported on the social club tax return.
We file a regular income tax return that includes the business and our personal... is that wrong? I didn't realize that we had to file separately for the business... I assumed that it was all included in our personal income tax..
so as far as our dealers, would they be responsible then for their own returns and tax liability or would they be considered independant contractors where we have to keep track or their tips and have to give them a 1099 form at the end of the year?
my husband and I always just filed a income tax return... do we have to do a separate return for the social club? also, if my dealers are considered self employed do I have to do anything as far as forms for them at the end of the year? Or would they be considered independent contractors and do I have to issue them 1099-misc at the end of the year?
If you do not have a separate registration for a social club - there no need to file a separate tax return - in this case - a social club is your business and that is your self-employment income. As long as dealers are not your employees - you do not need to keep track of their compensation (as long as the compensation is not paid by you).
You need to issue the form 1099-misc only if you pay them compensation for services.
If they pay you in the course of their business activities - they should issue the form 1099-misc if total amount is more than $600 over the tax year.
Could you explain what a separate registration means? and does this mean that I should be issued a 1099 from each dealer that has paid us more than 600 in the course of the year? and would they use the 1099 form and the amount they list as the amount they paid us for the rental in their own income tax return?
Social clubs might be registered as not-for-profit organizations under section 501(c)(7).
When you mentioned that you have a social club - my impression was that it is a separate organization.
You may find some additional information here - http://www.irs.gov/charities/nonprofits/article/0,,id=96189,00.html
If the dealer paid you more than $600 - that is a dealer's - not yours - responsibility to issue the form 1099-misc. Most likely - they will use the amount paid to you as a deductible business expense.
You still need to report that income regardless if the form 1099-misc was issued to you or not.
For income tax purposes - you do not have to register your social club.
For retail operations - sales tax purposes - you do need registration - on the local level - but seems you are OK with that.
If your activities are for profit - you may not have not-for-profit registration.
If you want to have a not-for-profit status for your social club - here are filing information - http://www.irs.gov/charities/nonprofits/article/0,,id=226391,00.html