micajah Posted February 7, 2014 Report Share Posted February 7, 2014 Hi Ladies, I need advice on this one. I have a customer who makes t shirt quilts. She is very nice. She just lost her regular longarm quilter. Said her LA quilter had to have surgery. I did 2 quilts for her and now she has asked me to be a subcontractor to her and do all her quilts. That would mean she gives me a 1099, or if I don't want to do that, she will "employ" me and pay all the taxes, ss, fed and state, etc. My dliemina is this...I don't want to subcontract or be someone elses' employee. I want to do quilts. I have my own business license, and pay all that myself as it is. I can't see why she would need to classify my work other than if it is of some benefit to her to do so. The way I see it, is that she is a customer like anyone else and just because she brings me a bunch of quilting, should not mean I am a subcontractor to her. We have discussed this ad nauseaum, and I am getting nowhere. But she is telling me that according to the law, she has to do this if what she pays me is more than $599 in any one year. I know that your customers whose quilting fees are over that amount, don't give you a 1099. My accountant said, I should do what I want to do. If she insists on otherwise, don't quilt for her. That is the way, I'm leaning. advice please. Debbie Link to comment Share on other sites More sharing options...
aktbone Posted February 7, 2014 Report Share Posted February 7, 2014 My feeling is that you have your business and that is that. You file as you have to with your tax person and enough said. "Sorry, but I will not follow your rules. Thanks for thinking about me for your quilting needs." Hope my bluntness does not offends anyone. I like to tell it like it is. Link to comment Share on other sites More sharing options...
shirleyl Posted February 7, 2014 Report Share Posted February 7, 2014 If she won't let you treat her like any other client and you didn't have her before to get by, I would say no thanks. I would confirm with your accountant if that is the law or not and if he says it isn't, I would tell her your accountant said so. Is it going to be worth the stress? Shirley Link to comment Share on other sites More sharing options...
Sue E. Posted February 7, 2014 Report Share Posted February 7, 2014 My feeling is that she is a customer - period! If she wants to utilize your company to have her quilting done - fine, but you are not her employee or a subcontractor. From what you have said, it sounds like she has her own business - maybe she makes quilts to order or on commission and sells them. She might be thinking that because she has a business she wants to treat you as a subcontractor who does her quilting. Be very careful of this situation because if she wants to treat you like this, she will probably ask for a large discount from your fees. Also, as you are your own business with your own licenses, you definitely are not an employee. Treat her like any other customer using your services. If she wants to give you a 1099, so be it. Give it to your accountant when he does your taxes. Just remember, you are your boss. You make the rules for your own business. If she doesn't want to follow your rules, send her on her way. Link to comment Share on other sites More sharing options...
micajah Posted February 7, 2014 Author Report Share Posted February 7, 2014 Thank you Tonilyn and Shirley. Your answers just confirms my feelings are not wrong on this. My business is not that busy and frankly, with Mom to care for, I don't want more than a few quilts each month or so. And I could care less if it is one person or a dozen different persons I do quilting for. It is so nice to know that I can come to this forum for advice. Bluntness is appropiate and so appreciated. Thank you! Debbie Link to comment Share on other sites More sharing options...
micajah Posted February 7, 2014 Author Report Share Posted February 7, 2014 Hi Sue, She does have her own business making the t shirt quilts. It may be a tax deduction for her to use a subcontractor, but I'm not giving anyone my ss# for a 1099. I think I will just tell her thanks but no thanks. Heck, I wouldn't even put it on a regular job application the last time I filled one out, until they said they needed to do the background check! LOL I loved what you said...."You make the rules for your own business. If she doesn't want to follow your rules, send her on her way." I think I will have to hang that on my wall. Debbie Link to comment Share on other sites More sharing options...
ffq-lar Posted February 7, 2014 Report Share Posted February 7, 2014 It seems you've made the best decision. Anyone who pushes you so blatantly to do something you're not sure of has some agenda other than your best interest in mind. I've never heard of her explanation before. And as for "subcontractors", in the trades a subcontractor pays all their own taxes so the contractor doesn't have to do the paperwork and pay the quarterlies. That means a double contribution for the employee and a break for the contractor. Her story sounds fishy. Link to comment Share on other sites More sharing options...
LisaC Posted February 7, 2014 Report Share Posted February 7, 2014 I think she wants to take total credit for the entire quilt and that is why she is pushing you to "subcontract" or "be her employee". You can read about 1099 forms on the IRS website. I believe she is correct when she says a business owner must send a 1099 to anyone she paid more than $599, but there are different rules and some exceptions. etc. Link to comment Share on other sites More sharing options...
dbams Posted February 7, 2014 Report Share Posted February 7, 2014 By law, a business must issue a 1099 for non-employee compensation (a.k.a. contractor payments) over $600 in one year, unless the person/entity receiving the compensation can prove they are a corporation. Even if you have your own business license, but are not a corporation, she would still be required to issue a 1099. Offering to hire you as an employee, if you did not want to work on a contractual basis, and then paying all the related taxes (some of which would cost her money) is also legally correct. So from a legal/tax standpoint, she is doing the right thing. (We have our own business, and part of my job there is the payroll and contractor payments, and related filings.) From an artistic standpoint, it may be that by hiring you for all her quilting, she could claim that work done under her supervision is her creation. I don't know if that's possible, and I'm not saying that is what she is doing. I would never have thought of this a possibility if others hadn't suggested it. The business aspect is all that occurred to me at first. Knowing that she is just following proper business procedure, if you are still not comfortable with the amount of work she is offering, or don't think you will like working for her so much, turn her down, or offer to do X number of quilts each month, but no more. Sec. 6041(a) “All persons engaged in a trade or business and making payment in the course of such trade or business to another person of rent, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable gains, profits, and income” of $600 or more must report the amount, the name and address of the recipient of such payment. Link to comment Share on other sites More sharing options...
TAQuilts Posted February 7, 2014 Report Share Posted February 7, 2014 In addition to regular quilt clients I do some LA quilting for professional trades such as upholsterer's, interior decorators and other businesses so I will get some 1099's at the end of the year from these business type clients. This is not out of the ordinary and it is expected, plus it is federal law for them to send me a 1099 if I do enough work for them in the year. I don't give these businesses my SS#, I give them my Tax ID #. At the end of the year I give the 1099's to my CPA right along with the tally of my regular customer invoices etc.., it's not an accounting problem at all nor does it add to my business paperwork. I don't treat or think of my business clients any differently than I do of my regular quilt clients, but the IRS does. I simply think she was just being upfront and honest with you in the beginning; that she is required to give you a 1099 at the end of the year if you "choose" to quilt for her business. She knows she pays out more than $600 in a year for quilting. Almost every one of the businesses I've quilted items for has informed me of the 1099 plus they wanted the required IRS form fill out upfront, even if maybe no 1099 may need to be issued at the end of the year, they simply didn't want to do/ or find out at the end of the year they were doing business with an under the table business. Terry Link to comment Share on other sites More sharing options...
RitaR Posted February 7, 2014 Report Share Posted February 7, 2014 Tell her you will quilt for her until her regular quilter is back in business.. and that with your Mom to care for, you need more time away from the quilter than most people do, and if she can't accept that as a no, she has a problem. Or, just say No, that is not what I want to do, nor have time for. Dunderheads sometimes need more force in a reply so the NO should be more like explosive.. lol Link to comment Share on other sites More sharing options...
micajah Posted February 7, 2014 Author Report Share Posted February 7, 2014 Lots to think about this morning. She wasn't making me feel comfortable at all in her explanations, but Terry and Betsy have explained it better. I don't think NOT receiving recognition as the quilter would be a problem. I am not a free hand quilter and I AM the no-talent one. But I do have a big IQ and that works great for me. No SS number to give out, only the EIN. I am above board with the tax payments. and will keep it that way.Thanks again for all the good advice given. Debbie Link to comment Share on other sites More sharing options...
cmkeindl1 Posted February 7, 2014 Report Share Posted February 7, 2014 Thank you Tonilyn and Shirley. Your answers just confirms my feelings are not wrong on this. My business is not that busy and frankly, with Mom to care for, I don't want more than a few quilts each month or so. And I could care less if it is one person or a dozen different persons I do quilting for. It is so nice to know that I can come to this forum for advice. Bluntness is appropiate and so appreciated. Thank you! Debbie We should always trust our "gut feelings"! Besides, I think it would be boring to do t-shirts quilts exclusively?! Link to comment Share on other sites More sharing options...
JustSewSimple Posted February 7, 2014 Report Share Posted February 7, 2014 You guys know I don't know anything...but....this is where I think she is coming from (right or not). When a customer brings you a quilt it is a personal property item. She is passing the cost of your work on to another - selling your work. That might have something to do with it. When I taught for a local quilt shop I used a 1099 to pay the taxes for the income I made. I had an LLC but did the 1099 too. There wasn't a problem and my accountant never said there was a problem. I am not saying this is the RIGHT way to do business. I am saying this is probably where she is coming from. Link to comment Share on other sites More sharing options...
Bonnie H Posted February 7, 2014 Report Share Posted February 7, 2014 Terry is correct. It is something she must do as a business if she wants to write-off the monies she pays to you if they total more than $599 in a fiscal year. If she had 100 longarm quilters and paid each under $599, she wouldn't have to do this, but apparently she likes your work (or can't find someone else) and wants to give you her business on the terms of giving you a 1099. For you, it shouldn't matter either way, a 1099 or not, if you are claiming all of your income and expenses, just so long as you are being paid the amount you desire. If she wants you to sign a contract, make it to your liking with regards to you can quit anytime, your turn-around time, etc. I work off 1099s in my "other" job. Of course, it's up to you as to whether you wish to take her business or not. I don't think she is trying to hustle you or come out ahead in any way, she's just playing by the rules of the IRS. P.S. I hate T-shirt quilts! I'd opt out for that reason alone! LOL Link to comment Share on other sites More sharing options...
JaniceC Posted February 7, 2014 Report Share Posted February 7, 2014 I'm Canadian, so certainly can't offer any suggestions about the US tax implications. On reading your original post, however, I wondered if having you as an employee/subcontractor might not give this person the impression that they have some control over when you do the quilting. You say you don't have that much outside quilting to do (right now), but if you did, would this person expect you to quilt her t-shirt quilts first, and quilts for others - or yourself - second, just because you are her 'employee'? Just a thought. Link to comment Share on other sites More sharing options...
quiltmonkey Posted February 7, 2014 Report Share Posted February 7, 2014 Wow. OK I think you have received a lot of excellent advice regarding this client/customer (whichever it is). With all of the advice you have received, bottom line is you should talk to a CPA. Different states have different laws. When I hear the term "subcontractor" or "contractor" that means you have a contractual agreement. Contractual in my eyes means a legal formal process. Legal paperwork; legal documentation. Get advice from either a lawyer or your CPA to get the straight scoop so you know your specific situation. Ask yourself this question: Would being a "subcontractor" -- would this create a certain requirement or liability? Contractual agreements and the liabilities that are within ... just know what you are getting into before you leap. Get legal advice. What your customer wants might be something that isn't really necessary and it could get you involved into something (legally) that you really don't want to be part of. Be informed. Let us know the outcome. I'm super curious! Link to comment Share on other sites More sharing options...
GrandmaLKB Posted February 7, 2014 Report Share Posted February 7, 2014 My first impression when I read about this was that this lady wants you to be her employee - subcontractor. In my mind that means you would be "on call" for her whenever she needed you whether you were busy or not. Personally I would not want to get trapped into something like that if I am trying to build my own business on my own time. Just my humble opinion............another reason I choose NOT to quilt for others............ I hope everything works out for you and you don't get stuck. Would it be possible to talk with her former longarmer to see what kind of arrangement they had? Maybe the surgery for the other longarmer was a convenient way for her to get away from this gal ???? Also, will she sell these quilts as her own creation even though she didn't quilt them? Link to comment Share on other sites More sharing options...
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