Residential Real Estate Broker · Grand Blanc, MI · Member since 2008 · 885 posts · 316 votes
I also own a small plumbing and heating company. It's formally owned by me, but my brother does 100% of the work as an independent contractor. Since 2008 was our first year, I've never had to 1099 him up until now. Since, I'm a cheap SOB, I don't want to buy the pack of 25 forms, nor do I need the software for just one 1099.
You need both 1099-MISC and the 1096 transmittal forms.
Also, does your brother work for anyone other than your company? Is that documented? I ask because if the lion share of his income for 2008 came from you through a 1099-MISC that sets off flags in the IRS computer system. It is likely he will be tagged for an audit or your company will be tagged for an audit or both.
To guard against this, it is important he "offer" his services to the market at large and that there is evidence of that.
Just say'n, cause it's all fun and games until the audit notice shows up.
Taz is totally correct. Actually I've been told by my CPA (do you have one?) that any consistent payment to the same IC and they can be viewed as an employee. You can get hit with back taxes etc. Ouch!!
He works full time on a W2 basis with a large heating and cooling firm in the area. That's where over 90% of his income comes from. He made only $4200 from me and the payments are not consistent at all. Very lumpy depending on the jobs. We're very small still... If an audit happens, so be it. I have nothing to hide.
I do have an accountant and she was the one who advised me to the Staples 1099 "kit".