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 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?
Answer by LoveMyDog at 2:52 PM on Sep. 2, 2010
Answer by UpSheRises at 3:54 PM on Sep. 2, 2010
Answer by rkoloms at 5:55 AM on Sep. 3, 2010