Employee vs other worker

[girlboss]

How do you pay people that you have come in to help out every now and then? Maybe a day you're short-handed and need help answering phones, maybe catching up filing or data entry, maybe calling doctor's offices about bills that clients need help navigating...just random things you need done and can pay someone to do.
Sometimes a person only comes one time ever, sometimes they come for a few days (consecutively or not), and in one situation, there's a retired office manager from a doctor's office that is usually our first call when we need help, so she is here sporadically. She also "fills in" at 2 other doctor's offices for the same things so sometimes she's available and sometimes she's not.
So, how do you pay these people that only come every now and then? What does your CPA say? In the past, we've always just agreed upon an hourly amount for their time and we wrote them a check at the end of the day. My CPA says I can't do that and must pay them as employees (along with all the hassle that goes along with it). I don't know any other agent that sets up employee status for every person that helps them out, so I'd like to hear what other agents are doing.

 

[fed up]

By the hour

 

[girlboss]

But do you pay them as empl0yees (holding out & paying extra taxes) or do you pay them as 1099 workers assuming it's over the $400 or $600 threshold for reporting?

 

[Al3x Lee]

Sounds like a question for your CPA, what did they tell you was the solution?

 

[girlboss]

The CPA said I have to set them up as an employee, but I'm questioning it because I don't know ANY other agent that does it that way, no other CPA has ever told me that (this is the 3rd one I've used), and because I truly don't think this particular person fits the definition of an employee.

If you were short-handed one day and just needed someone to help answer the phone lines so you asked an acquaintance to help for the day, by the CPAs definition, I'd have to go through all of the things to set that person up as an employee. That seems overboard to me. I mean, can you imagine having to mail out triple the amount of W2s and some of them being less than $100 for the whole year.

 

[Tahoe Ray]

Not tax or legal advice but you could just pay them under the table. You won't get a write-off but you'll save a ton on admin.

 

[Life Hawk]

How do you pay people that you have come in to help out every now and then?

Under the table?

 

[girlboss]

Tahoe Ray: I guess that's what everyone is doing, but I could really use the write-offs. I guess saving on admin balances it out somewhat.

 

[Tahoe Ray]

Tahoe Ray: I guess that's what everyone is doing, but I could really use the write-offs. I guess saving on admin balances it out somewhat.

It 100% does (in theory...I don't do this nor does anyone I know).

 

[LostDollar]

The CPA said I have to set them up as an employee, but I'm questioning it because I don't know ANY other agent that does it that way, no other CPA has ever told me that (this is the 3rd one I've used), and because I truly don't think this particular person fits the definition of an employee.

If you were short-handed one day and just needed someone to help answer the phone lines so you asked an acquaintance to help for the day, by the CPAs definition, I'd have to go through all of the things to set that person up as an employee. That seems overboard to me. I mean, can you imagine having to mail out triple the amount of W2s and some of them being less than $100 for the whole year.

Caveat, not an agent.

I think I would agree with your CPA on this one.

What you think is an employee is not relevant here, it is how the IRS defines employee. I'm pretty sure the IRS has definitions of employee in one or more of their pubs-no idea which one(s), so I can't point you to something; but these people are working in your office, under your supervision with a variety of small tasks for which you have well defined directions and control over. I am confident that will meet IRS definitions of employee and is why your CPA(s) have provided the advice you have received.