Deducting Independent Contractor Salary?

[dream surfer]

If our company charges our client $20 per hour and pay our Independent Contractor $11 of those $20 dollars, are we responsible for paying tax on the entire $20 or the remaining $9 only? We are a partnership, registered to do business in the state of NY. We report on 1099.

 

[crager34]

If you would actually read the law, you would see that you are not responsible to withhold any Income Taxes at all. If you pay someone to help run your business, it is a business expense. There are companies out there that are figuring this out, adjusting the way they do business (actually following the letter of the law), getting refunds of monies withheld in the MILLIONS, and increasing their bottom line 15 - 30%. All without buying anyone's "program."

 

[dream surfer]

Independent Contractors

Thank you for your response but I think I need to clarify. We are a new business, so we are a little unclear how the tax law applies to us. So we report the $20 but we deduct the $11 as a business expense? We are dealing with Independent Contractors and not employees. Thanks in advance for your reply.

 

[crager34]

I am assuming then, you are a contracting company. You just need to change your way of thinking is all. Checke out how these folks do it.

http://www.americancontracting.com/

I want ot make something perfectly clear. I do not belong to this group... I am not selling anything. I know how they operate and they do it correctly. IF your not satisfied with that, if that doesn't answer your questions. Loku might be able to help on this one, as he seems to know the laws as well.