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if i start a business, do i have to do w4's and take the taxes out for the employees, or can i just cut the full check and it is their responsibility to put away the money for taxes and such?

2006-08-09 03:10:19 · 8 answers · asked by Anonymous in Business & Finance Small Business

8 answers

The only way you will NOT have to take out taxes is if you are able to classify them as independent contractors. Then, you can cut them the full check and issue them a 1099 at the end of the year (instead of a W-2).

BEWARE!!! Don't classify them as independent contractors (1099) unless you check with your tax advisor first. The IRS has strict guidelines on this and you might have seen some companies get sued for classifying "employees" as 1099 contractors (Microsoft to name one).

Also, don't forget that if they are employees, you not only have to take taxes out of their check, you have to match what they pay in Social Security and Medicare. Not to mention, you probably have to pay unemployment taxes, etc.

Get an accountant. It will probably save you a lot of money and headache in the future.

2006-08-09 06:18:16 · answer #1 · answered by Anonymous · 0 0

If they are employees, you must take W4 information, withhold taxes, pay Federal Unemployment (FUTA) and State Unemployment (SUTA), Worker's Compensation Insurance, plus the EMPLOYER half of FICA.

Declaring these people independent contractors may not be sufficient. The IRS has been cracking down on this.

Check with your Accountant and/or lawyer.

2006-08-09 05:22:57 · answer #2 · answered by Jon T. 4 · 0 0

If you have to ask, you may not be ready to "start" a business. If you pay by check, you as the employer are responsible to take out taxes. All taxes, including your portion as a business.

2006-08-09 03:14:59 · answer #3 · answered by educated guess 5 · 0 0

No you don't. But you will have to give them a 1099 at the end of the year. I work in an office and we get our checks without taxes taken out. I pay my own taxes quarterly and my employer will issue me a 1099 in January.

2006-08-09 03:18:24 · answer #4 · answered by Blue Eyes 4 · 0 0

depends on "how" you hire those individuals.

If you hire them as "employees" then YOU have to do the w4's and take taxes out, etc. They do what you assign them to do.

If you hire them as "independent contractors" then THEY have to have their own occupational license and they do their own w4's and taxes and you pay them by the project with a contract. They accept the project and then do it as they think best, and following your guidelines.

2006-08-09 03:22:48 · answer #5 · answered by sophieb 7 · 0 0

You have to withhold taxes (federal, social security, medicare, state and local) and do tax reporting.

Or you might hire people through a temp agency and let their company do that.

Or contract with an accounting firm to do your payroll and tax reporting for you.

2006-08-09 03:17:55 · answer #6 · answered by frugernity 6 · 0 0

I would think so unles you are paying under the table and i think that elligal.

2006-08-09 03:19:32 · answer #7 · answered by shenyce 2 · 0 0

your best bet is to hire a CPA to do this for you

2006-08-09 03:14:54 · answer #8 · answered by littlebettycrocker 4 · 0 0

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