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  • 1099 Question California

    Can a business owner issue a 1099 to self?. My brother owns a retail grocery store and in an effort to minimize cost he studied refrigeration and eventually got certified to do refrigeration work. Federal laws states that no person may purchase refrigerants and work/repair/install refrigeration equipment unless that person is EPA certified. He is paying himself aside from his regular wage a set amount per month to maintain and repair refrigeration at his store. He states that he will save more in the future in repair and maintenance cost by doing it himself instead of hiring a refrigeration company. Does he qualify as an independent contractor?
    Last edited by avslaw09; 10-12-2009, 05:52 PM.

  • #2
    What is the legal structure of the business?
    Please post questions on the forum rather than sending me a private message or email. That way others who have similar issues have access to the discussion.

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    • #3
      It is a california corporation

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      • #4
        A stockholder can be an employee of a corporation. A stockholder can be an IC of a corporation. Any person being both an employee and an IC of the same company in the same time frame is very iffy. It brings into question all of the employment states and issues (exempt, non-exempt, salary, hourly, etc.) as well as the IC issues. With the limited info you provide, I don't think it would stand up. It seems to be a very risky approach if the intent is to avoid employee taxes on the refrigeration work. If he is the sole stockholder and wants to pay himself more, he should just do that.
        Please post questions on the forum rather than sending me a private message or email. That way others who have similar issues have access to the discussion.

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        • #5
          Thanks for your reply. Here's more details:

          He use to hire several different companies to maintain and repair his refrigeration equipments. Now, unfortunately the cost was prohibitive and there were a lot of dishonest dealings with some of the companies. Out of frustration, he went about and learned the trade. He wrote a maintenance contract with his corporation detailing his right, responsibilites, liability and compensation. Now according to his accountant since he is doing something unrelated to his business, it should be ok. Everytime he repairs something he submits a detailed job work/invoice where he describe the work done and hours it took to complete like what the other outside contractors do. However, since he is paid a fixed monthly fee his invoice always totals to zero. According to him, that is how the maintenance contract he had with big companies like Hobart & Tyler Refrigeration work. This is where I am not too comfortable.

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