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Is my advertiser considered an employee? and when I pay him do I take taxes out>

Orange, CA |

I'm starting a business where small businesses help advertise a product of mine in their store. I pay them 50% of my total revenue from that particular store. (For Example: If one month the small business store owner sold 10 products for me, which came out to $100, I give him 50%, which is $50.) When I pay him do I have to take out taxes, as If he was an employee?

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Attorney answers 3

Posted

Based on your limited facts, I would analyze the businesses as independent contractors. You will have to issue them 1099s. Additional facts might change the analysis.

The above is general legal and business analysis. It is not "legal advice" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also avvo.com terms and conditions item 9, incorporated as if it was reprinted here.

Asker

Posted

Would I have to issue a 1099 even if the amount of each store owner only made around 100 a month? Or does the amount not matter? To add additional information I'm working for a larger company who has a huge list of affiliate products and I'm picking one of them, making a deal with the small business owner to help advertise with flyers. The store owners aren't necessary doing any work for me. I'm just using their space. They are all digital products. If that makes a difference on what I need to do, let me know! Thanks so much.

Justin C. Lowenthal

Justin C. Lowenthal

Posted

1099's need only be issued to contractors for income paid if the total annual payments is >$600.

Posted

As Mr. Doland has stated, based on the facts you've provided, these persons would not likely be considered employees. You would therefore not be required to withhold taxes, as you would for an employee, and would instead issue them 1099s.

The information presented here is general in nature and is not intended, and should not be construed, as legal advice for a particular case. This posting does not create any attorney-client relationship with the author, and Pham Law Group does not represent you as your attorneys until retained by a written retainer agreement signed by both parties.

Posted

These businesses are almost certainly independent contractors. However, being that employment misclassification is a very serious legal issue for many businesses, you would be prudent to have a business attorney review your independent contractor maintenance program/policy(ies). If these businesses are in fact independent contractors, you would not need to withhold taxes. Taxes are paid exclusively by the contractor.

This response is not intended, nor should it be construed as legal advice. Any information provided is for educational purposes only. To schedule an appointment for an attorney-client privileged consultation, contact me at 530-231-4949 or visit our website at www.lowenthallawoffice.com. The exchange of communications through Avvo.com and similar social media does not establish an attorney-client relationship with me or my office. Thank you.

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