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How to categorize wages paid to an independent contractor?

Hope123Hope123 Member Posts: 8
A single member LLC owner with S Corp works in healthcare. He gets a W-2 from the his LLC. He works nights and weekends sometimes. If/when a coworker covers for him, assuming the LLC owner pays the coworker with a check from business account (he will have to issue a 1099 to the coworker), how would the payment be categorized? Would it be correct to treat it as an expense since the payment reduces LLC owner’s pay? Hope this is not confusing. Thank you in advance for any insight!!
in Accounting Technical Support

Comments

  • Hope123Hope123 Member Posts: 8
    I want to clarify what I mean by coworker covering for the owner. Owner would be outsourcing his work responsibility to a coworker since he is not able to work as scheduled. Hope this makes sense. Thank you!
  • MikegMikeg Member Posts: 995 ✭✭✭

    @Hope123,
    You would classify the payment as Contractors. If the payments exceed $600 for the year, then you are required to issue a 1099.

  • Hope123Hope123 Member Posts: 8
    Great, thank you!
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