Fun fact: There are three types of individuals who can represent you before the IRS: Attorneys, CPAs, and Enrolled Agents. Hell is an Enrolled Agent? Well, a CPA has 4 tests and one of them touches on taxes. EA's take 3 tests and 2 of them are on only taxes (3rd is IRS representative regulations). Main difference? EA's are cheaper than the first two.
Anyway, I got one test left for the EA designation. So I'm not an expert, but I've spent the past 2 months reading the tax code 3-5 hours a day.
Quote:
Originally Posted by BillyMac
I always check off "Individual/Sole Proprietor Or Single-Member LLC" on W-9 forms, but don't really know what that means, or if it has anything to do with independent contractor status or employee status.
Perhaps tax status has absolutely nothing do with independent contractor status or employee status?
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Tax status & employee status are linked. To make it simple: That 1099 you get goes to your Schedule C, and you get double tapped on it; first time as "business income" and then again as "personal income".
LLC & S-Corps get to avoid that, so those who are members/shareholders get taxed only once for that income. It's why on a lot of camp forms you'll see pay to "Zebra Refs, LLC" instead of "Bobby Joe". Employees also get to avoid that, as the employer pays half their share of FICA taxes. As an employee you also only pay "personal income" tax on that, not the additional "business income".
Now here's the fun part: An individual is usually an independent contractor if the employer, the person for whom the individual performs the services, has the right to control or direct only the result of the work and not the means and methods of accomplishing the result.
What really matters is the
right to control how you work, not the results. What is the result of our work? A fair game? Equity? Ref every call properly? But tell me, we are told how to do our jobs are we not?
How many of us are getting fired if we show up and walk up and down the court? How many of us are getting phone calls if we use unapproved mechanics? Didn't get to the reporting area before you reported the call? Didn't show up 90 minutes before game time? Make the wrong call? You weigh too much?
The schools might not employ us, but the assignors sure do. In VA associations get contracts, not refs. Then the association "works" the game. How you can be an IC yet work for an association that tells you how to ref, where to work, and what time you work flies in the face of reason.
Why not make us employees? That's easy: Insurance, taxes, per diem, pay roll, benefits. It's a headache that no one wants to deal with.