Blog- 1099 Contractor Verification Reports

Welcome to the got1099 Blog

Get news and updates on all things EDD and 1099 Contractor related:

EDD Audits happen fast and require immediate attention

Ensure that you are ready in the face of any government audit or inquiry into the status of your 1099 contractors with the got1099 reports.

Our blog is dedicated to 1099 contractor classification issues, case studies, and news articles.

News

The Labor Shortage Explained

Across the country, “We’re Hiring” signs seem to sit in businesses’ windows as casually as “We’re Open” signs. The phenomenon of experiencing a labor shortage during a global pandemic has prompted economists to search further into why, during unprecedented times, are people quitting their jobs? Let’s discuss why there’s a workforce shortage, and what it means for businesses in our article: “The Labor Shortage Explained.”

EDD can audit your business 12 quarters back from the quarter they pick

EDD Audits, News

How Far Back Can EDD Audit Your Small Business?

Employment Development Department (EDD) performs many services, but their primary role that impacts small businesses is collecting and auditing payroll taxes. Employers pay payroll taxes for W-2 employees, but not for 1099 independent contractors.

a 1099 independent contractor is considered self-employed so they cannot collect unemployment benefits

EDD Audits, News, Worker Classification

Can a 1099 Collect Unemployment?

In short, 1099 independent contractors cannot collect unemployment. They do not qualify because of their self-employment status – meaning their employment status technically never changed because they were never employed by someone.

There are upcoming changes for gig workers in 2022

Construction, News

Upcoming Changes for the Gig Economy: What’s in Store?

Independent contractors, also known as gig workers, work on a contractual basis for a specific job. This is becoming a highly desirable form of employment for individuals as well as for businesses looking to hire contractors to complete tasks outside of their typical scopes of work. 1099 independent contractors are self-employed, create their own hours, use their own equipment, are paid a set rate, and do not have payroll taxes deducted from their payment—which saves employers money.

have a coi in place to make sure your independent contractor is covered in case of injury

Construction, Medical, News, Personal, Worker Classification

What Happens If My Gig Worker Gets Injured on the Job?

When performing a job, there is a possibility for injury. A roofer could slip and fall off a roof, a plumber could injure themselves fixing your pipes, the list goes on. What happens if you hire an independent contractor, otherwise known as a gig worker, who is injured while working on your project? So, let’s answer the question: What happens if my gig worker gets injured on the job?

create the right independent contractor agreement when working with 1099 independent contractors

Construction, News, Worker Classification

What to Include in an Independent Contractor Agreement

Using independent contractors to assist with your day-to-day business functions is becoming increasingly popular. Before you look to hire contractors, it is important to understand what should be included in the contractual agreement. This helps keep your business safe from legal trouble in the future.

A W-2 employee is someone whose work is controlled by the employer in terms of what they do, when they work, how they are paid, the equipment they use (provided by the employer), and how they report.

News, Personal, Worker Classification

Can a Part-Time Worker be a W-2 Employee?

Depending on the state you live in, and the employer policies, part-time workers may not be eligible for the same benefits as full-time employees. While the benefits they must be offered differ based on their hours, that difference does not relate to their classification as a 1099 vs a W-2. Misconceptions persist regarding employment classification of part-time vs full-time vs contract or project-based workers. Following is an explanation and clarification of why a part-time worker can be a w-2 employee.

California CPA's can help their clients reduce an EDD audit risk by asking the right questions

EDD Audits, News, Personal, Worker Classification

California CPA’s: Questions to ask your Clients to Reduce EDD Audit Risk

Certified Public Accountants (CPAs) have the most insight into their business owner clients’ daily transactional history. In this role, you may find that your business owner clients have 1099 contractors who are in the grey area of worker classification now that classification was redefined by AB-5 in January 2020.

A got1099 report helps business owners correctly classify workers and employees and avoid government fines and penalties

EDD Audits, News, Personal, Worker Classification

How does a got1099 Report Help Business Owners in the Face of an EDD Audit?

The California Employment Development Department (EDD) is a government agency that provides unemployment benefits, collects and audits payroll taxes, and maintains California employee records. With the new AB-5 regulations, there are stricter worker classification rules. Now, workers are only classified as independent contractors if they meet all three criteria of the ABC test.

Hire an independent contractor and comply with California law to avoid triggering an EDD Audit

EDD Audits, News, Personal, Worker Classification

How to Hire an Independent Contractor

Hire an independent contractor and comply with California law to avoid triggering an Employment Development Department (EDD) audit. Following the steps below does not guarantee that your contractor will still remain a contractor if you are audited by EDD. However, there are ways you can strengthen your position and not have your contractors reclassified as employees.

Dynamex reclassified their W-2s as 1099s, stripping employee benefits. The Supreme Court ruled this unconstitutional and implemented the ABC test.

EDD Audits, News, Worker Classification

How Dynamex Ruined it for Everybody

Dynamex was a nationwide same-day delivery and courier service. They employed their California drivers as W-2 employees who received the benefits, payroll taxes, and perks of being a W-2 employee. Then in 2004, the company reclassified all of its California drivers into 1099 independent contractors to save employee costs.

The ABC test is now used to classify workers instead of the Borello Test

EDD Audits, News, Worker Classification

Borello vs. ABCs of Contractor Classification

The California Employment Development Department (EDD) uses the new Assembly Bill 5’s ABC test to identify worker classification. However, the older Borello Test can also be used in less clear classification circumstances. When it comes to correctly classifying your workers, how do you know which test to use and when?

Rideshare drivers will automatically be classified as 1099s with Prop 22

EDD Audits, News, Worker Classification

Prop 22 Explained

Proposition 22 appeared on the 2020 ballot as the rideshare and app-based driver responded to AB5. California Proposition 22 was passed by voters in California and defined app-based rideshare drivers, such as Lyft, Uber, and Grubhub drivers, as 1099 independent contractors instead of W-2 employees.

EDD Audits, News, Worker Classification

EDD Audits in 2021: What You Need to Know

The Employment Development Department (EDD) sends audit letters through the mail. If you receive an audit letter, you have 30 days to reply. Typically, the agency audits back three years from the most recent tax filing. However, EDD sometimes will audit the previous year’s tax filings.

The Ultimate Guide to Payroll Tax Audits

Construction, News, Worker Classification

W2 vs. 1099 workers: A Cost Comparison

Before deciding between hiring a W-2 employee and a 1099 worker, it’s beneficial to weigh the differences in costs between the two. Consider, depending on the job, one may be a more cost-effective option than the other.

EDD Audits, News

The Ultimate Guide to Payroll Tax Audits

In California, the Employment Development Department (EDD) conducts audits of payroll taxes across the state. During the audit process, the assigned agent looks at classification of W2 employees and 1099 workers, and whether the correct payroll taxes were collected on payments made to all workers. Business owners should ensure their business is prepared for an EDD tax audit and that they have adhered to the new ABCs of worker classification set out in AB-5.

What do you need to know about commodity inflation?

Construction, CSLB, News, Worker Classification

Commodity Inflation: What You Need to Know

Over the past year, commodity prices, especially in the lumber industry, spiked. Simultaneously increased demand for buildings, backyard renovations for new patios and decks all impacted the lumber industry as it saw record-breaking peak prices never seen before. Now, as demand has slowed its pace, prices are dropping again, but what does that mean for the lumber industry and homeowners?

News, Worker Classification

Frequently Asked Questions

Read our frequently asked questions to get a better understanding of the difference between 1099 independent contractors and W-2 workers.

Construction, News, Worker Classification

Why Might it be Preferable to Hire an Independent Contractor?

An independent contractor, also known as a gig worker, is hired on a contractual basis by an employer for a specific job. This could be to build a patio deck, to install flooring, and much more. These contractors are hired for an agreed-upon job, can work for multiple employers simultaneously, and overall have more work independence.

How can gig workers prepare for tax season?

Construction, News, Worker Classification

Gig Workers: How to Prepare for Tax Season

Gig workers, otherwise known as independent contractors, complete jobs on a contractual basis. They have the autonomy to choose when and where they work, have control over work instructions, evaluate their own work, and are well versed in the job they’re hired to complete. Their behavioral control is unlike employees who are told when and where to work, how to work, and who may require job training.

Construction, News, Worker Classification

6 Best Gig Work Websites

Hiring experienced, reliable employees helps you, as a business owner, complete your project with efficiency and reliability. Independent contractors, otherwise known as gig workers, provide services based on a contractual agreement. They have different behavioral control, financial control, and relationships with employers than W-2 employees. When it comes to hiring an independent contractor or subcontractor for your next project, do you know where to look? We’ve pulled together a few of our favorite resources to begin hiring your next independent contractor.

EDD Audits, News, Worker Classification

1099-NEC vs 1099-MISC

In 2020, the rules for filing and submitting 1099-NEC and 1099-MISC tax forms changed. Moving forward, 1099-MISC forms are no longer used to submit nonemployee compensation. This separates nonemployee payments from miscellaneous payments and eliminates the confusion around form due dates. Filing either 1099-NEC or 1099-MISC requires the completion of a Form 1096 as well. This is an Annual Summary and Transmittal of U.S. Information Returns that summarizes all of your 1099 files for the year. IRS uses this form to summarize the tax forms businesses send to hired workers.

EDD Audits, News, Worker Classification

W-9 vs 1099

As an employer hiring independent contractors, like construction workers, you need specific tax forms that differ from those given to full-time employees. The forms needed for 1099 workers include W-9 and 1099. Both forms provide the employer and employee with the correct tax files to ensure compliance with IRS regulations. The main difference between the forms is in files the form and what financial documentation is provided. Understanding the difference between these forms will help make sure you’re ready for tax season.

News, Worker Classification

Prop 22 Overturned by CA Supreme Court

Prop 22 is an initiative for rideshare drivers, like Uber, Lyft, and Doordash, to be classified as independent contractors instead of employees. It advocates that these workers would then be independent contractors who have the labor and wage policies specific to the companies they work for instead of employee benefits of overtime, paid sick leave, and health care.

EDD Audits, News, Worker Classification

1099 Forms: What you need to know as a business owner

A 1099 form is a tax form specifically distributed to independent contractors. Correct distribution of 1099 forms keeps you in compliance with EDD’s strict classification guidelines. Independent contractor’s 1099 status differs from W-2 workers. Since the 2020 passage of AB-5, the Gig worker bill, the criteria for correct contractors and worker classification changed.

EDD Audits, News

What is an EDD Benefit Audit?

If you’re a business based in California, you’ve likely had dealings with the Employment Development Department (EDD). It is the responsibility of EDD to collect payroll taxes and conduct payroll tax audits of companies and businesses. In addition, EDD performs what’s called Unemployment Insurance (UI) benefit audits. The federal-state unemployment insurance system (UI) helps people who have lost their jobs by giving them temporary wage replacement. The purpose of the government benefit audits is to protect the integrity of the UI program.

EDD Audits, News

Biden Administration Revokes Employer Friendly Independent Contractor Test

In early May of this year, the Biden Administration officially made the decision to revoke the previously adjusted Trump era ruling on independent contractor classification.

EDD Audits, News, Worker Classification

CA EDD Updated Information Sheet Released

For employers who hire both W-2 and 1099 contractor workers, it is essential that the criteria for a worker to be classified as a contractor are met. To meet those requirements, one has to actually understand the requirements... a task that the labyrinthine language of government entities does not make simple.

Construction, CSLB, News

July CSLB Report of Stings/ Sweeps and Contractor Audits

CSLB Report of Stings/ Sweeps and Contractor Audits - On July 1st CSLB released the following article re: site sweeps. Are your workers correctly classified?

EDD Audits, News, Worker Classification

EDD Freezing Thousands of Unemployment Debit Cards

Last year, 15 unemployed Californians brought a lawsuit against Bank of America for freezing their unemployment benefit debit cards. U.S. District Judge Vince Chhabria ruled in favor of the plaintiffs and prohibited B of A from freezing unemployment debit card accounts that were flagged as fraudulent through their “automated fraud filter.”

Welcome to the got1099 Blog

Get news and updates on all things EDD and 1099 Contractor related:

EDD Audits happen fast and require immediate attention

The Labor Shortage Explained

How Far Back Can EDD Audit Your Small Business?

Can a 1099 Collect Unemployment?

Upcoming Changes for the Gig Economy: What’s in Store?

What Happens If My Gig Worker Gets Injured on the Job?

What to Include in an Independent Contractor Agreement

Can a Part-Time Worker be a W-2 Employee?

California CPA’s: Questions to ask your Clients to Reduce EDD Audit Risk

How does a got1099 Report Help Business Owners in the Face of an EDD Audit?

How to Hire an Independent Contractor

How Dynamex Ruined it for Everybody

Borello vs. ABCs of Contractor Classification

Prop 22 Explained

EDD Audits in 2021: What You Need to Know

W2 vs. 1099 workers: A Cost Comparison

The Ultimate Guide to Payroll Tax Audits

Commodity Inflation: What You Need to Know

Frequently Asked Questions

Why Might it be Preferable to Hire an Independent Contractor?

Gig Workers: How to Prepare for Tax Season

6 Best Gig Work Websites

1099-NEC vs 1099-MISC

W-9 vs 1099

Prop 22 Overturned by CA Supreme Court

1099 Forms: What you need to know as a business owner

What is an EDD Benefit Audit?

Biden Administration Revokes Employer Friendly Independent Contractor Test

CA EDD Updated Information Sheet Released

July CSLB Report of Stings/ Sweeps and Contractor Audits

EDD Freezing Thousands of Unemployment Debit Cards

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