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Can an outsourced employee use my equipment to finish a job?

Company A is a handyman service, a do it all type company.
Company B is a recycling company.

Company B would like to have Company A pick up and relocate their recyclables.
However Company B wants a W4 to be filled out by Company A's employee. They are saying that this person will be their employee, even though they are getting an invoice from Company A, and Company A is the one paying the employees wages.

Company B says that they are the employer because the employee is using their equipment.

I know kind of confusing isn't it? What I'm trying to determine is what if any tax ramifications wil this have on company B? what taxes are the liable for?

Answer Question
 
shewolf13

Asked by shewolf13 at 2:37 PM on Sep. 2, 2010 in Money & Work

Level 4 (50 Credits)
Answers (5)
  • It sounds odd to me. I agree with company A that the employee is being paid by them and shouldn't have to complete a W4. If they want to hold someone reliable for their equipment they should have them fill out a waiver or something.
    Memigen

    Answer by Memigen at 2:46 PM on Sep. 2, 2010

  • Either company B is purchasing the services of company A or company A is a recruiting service and Company B is paying the employee wages PLUS paying company A a recruiting fee. They can't have it both ways. Whoever cuts the checks to the employee is the employer. Now if the employee gets a 1099 rather than a W2 then the employee is considered self-employed and has to pay self employment tax rather than one of the two companies paying payroll tax. Does that help in the slightest?

    LoveMyDog

    Answer by LoveMyDog at 2:52 PM on Sep. 2, 2010

  • Company B is buying the service. They are billed by Company A, and they pay Company A, they do not pay the employee, Company A pays the employee.

    Company B is now saying thats not the case because Company B owns the equipment the employee uses.
    shewolf13

    Comment by shewolf13 (original poster) at 3:41 PM on Sep. 2, 2010

  • It might also be an issue with liability insurance?
    UpSheRises

    Answer by UpSheRises at 3:54 PM on Sep. 2, 2010

  • Company B is hiring Company A to perform a service. Company B can certainly require Company A to provide a contract for both to sign, along with a certificate of liability. Company B can issue a purchase order to Company A, if they desire.

    Even if Company B was leasing an employee from Company A, the employee is still employed by Company A.
    rkoloms

    Answer by rkoloms at 5:55 AM on Sep. 3, 2010

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