Hiring a laborer for first rehab-what do I need to do?

[David Robertson]

My younger brother will likely be doing some of the general labor around my first rehab project. He is going to likely be using some of his hours towards his internship program at school to graduate. I'm curious, what all needs to be done in order to pay him legitimately in the eyes of the IRS?

Do I need to have a company established? What paperwork does he have to fill out? Do I have to provide him with insurance?

Thanks for your input.

[James Vermillion]

Originally posted by David Robertson:

Originally posted by James Vermillion:

It sounds like your brother will be acting as a contractor, meaning if you pay him over the IRS limit (I believe it is still $600) you will need to issue a 1099. Whether or not you create a business entity is up to you, you can read hundreds of threads on BP about the pros and cons of entities, how to form them, etc.

As a contractor you do not have to provide him with insurance (they typically insure themselves).

Do I need to file a 1099 form for each contractor that I have on-site or just for independent contractors/individuals? Do I only do this when I file my taxes for 2012? How do you track all of your expenses?

Thanks.

If you use a general contractor you will only need to worry about a 1099 for that person, but if you use separate subs you will need to file a 1099 for each of them (that is paid over $600 in the year). I track everything in QuickBooks which allows me to print a 1099 report at the end of the year to see who I need to issue one to.

I have all people who do any work for me fill out a W-9 (Request for Taxpayer Identification and Certification) prior to starting any work. I file this information so I have what I need when I issue the 1099s (at the end of the year).