I have a guy that I depend on to run a lot of my business. He watches workers and oversees most of my production. He is paid at $38.00 an hour so the money must be claimed.How do I make it so he can simply get paid out by me, without me worrying about insuring him or tax problems? I'm also interested in finding the most cost effective method. Prior, I was paying him out s a consultant. I was guessing I would have to set him up with his own company name and pay him out as a contractor?

Is he considered an employee on any filings that you do for your business? Or, is he an independent contractor? For most of my business that I do, I am considered an independent contractor. The people who employ me don't pay insurance for me and they don't file taxes on me. It is entirely up to me to take care of those things.

I have not been in the situation of being an employer of someone else other than hiring another independent contractor when I have needed something done. If someone has hired me as an independent contractor for a considerable length of time, then it is nice if they would give me a W-9 form before tax time.

Perhaps your question might have a better home over in the Taxes topic area of this site? It would get noticed there more by the people who would best be able to answer your question. I can just give you my viewpoint from the standpoint of someone who is most of the time, an independent contractor.

It he makes business decissions, has the ability to hire people for you and do other tihngs, It is not how you want to pay him, but what his actual duties are with your company. If he is merely a contractor, he does not run your business, if he is a consultant?

But he has to be aware that first you don't pay him by the hour, you would pay him a set amount for his services. Also they have to know that they will be paying their own taxes on the money. Including the part of the social security tax you should be paying for him

You should have your tax accountant review his position to see if he can be paid as a 1099 worker.

But either way if you pay him as a 1099 he has to know it, and he has to file his taxes quarterly paying his estimated taxes.