Self-employed, but do I need an EIN to pay a helper?

Question

I am an IC medical transcriptionist. Sometimes I use a helper when I get really busy. Last year I paid her less than $599, so I just put it as an expense, but what happens if I go over $600? Do I need an EIN and do I give her a 1099?

If I have an EIN, can I still file with a Sched. C or does my business have to file separately?

Sorry for all the questions!

Answer 1

I think the real issue here is, is she really an employee and not an independent contractor?  You need to look at that before deciding how to treat this situation.  Basically, if you're controlling the work she does and how it's done, she is an employee who is therefore subject to withholding.  You can read more information on this here:

http://www.irs.gov/businesses/small/arti...

Once that's settled, if she's an employee, you will need to get an EIN, make payroll tax deposits, file payroll tax returns, and give her a W-2.  You can still use Schedule C if you have an EIN.

If she's an independent contractor, you do not need an EIN.  If her income goes over $599, you will need to issue her a 1099-MISC.  You can use your SSN to report this.

It sounds a lot easier if she's an independent contractor, but if you treat it the wrong way, she gets the 1099-MISC, realizes she has to pay self-employment tax, and reports you, it could be a lot worse.  Make sure you classify her correctly.

Hope this helps!  Any other questions, just ask!

Re: Your Additional Information

Then, as stated, no EIN is necessary and you can still file on Schedule C.  If you pay her more than $599, then yes, you will need to file a 1099-MISC for her. using your SSN as your identification number.

Answer 2

NOPE, no EIN needed, canuse your SSN

file schedule C

give her 1099

Answer 3

Yes you'd need an EIN - see http://www.irs.gov/businesses/small/arti...

You still file the same way as you have been

Answer 4

The answer that says to just give a 1099 may get you in a lot of trouble. The IRS and other agencies take a hard look at independant contractors vs employees.

Do you set their hours. Do you supervise their work? Do you set the rules and guidelines for their work? If so, they are employees and you must get an EIN, take out taxes, get workers comp, etc.

If you fail to do so, you can be fined, held personally responsible should the person get hurt, etc.

It is harder and harder to qualify someone as an independant contractor.

Answer 5

Yes you can file the same while using an EIN and you will be required to get one if you need to report the helpers income.  It really isn't a big deal and you can reques an EIN online at IRS.gov

Answer 6

It's still more complicated than the other answerers have proposed.  It depends on whether she's an employee or an independent contractor.

You may apply for an EIN, whether or not you need one.  There's no cost.

If she's an an independent contractor, then you don't need an EIN; if you don't have one, and need to file a 1099, you'll need to give her your social security number on the 1099 as payor.  If you don't trust her, that could be a problem.  There may be additional state requirements.  For example, California recently (2003?) added a requirement that, once you pay or contract to pay an independent contractor $600 or more, you need to file a statement with the state employmentagency (EDD) within 30 days, so that the state can contact you to withhold payment if there is any outstanding child support obligations.

(removed details on what to do if she's an employee, as I saw your "additional details" while cross-checking the information I was working on.)

There's a space on Schedule C to provide an EIN, if you have one.  It doesn't otherwise effect the return.