Using Husband's License

housefulSeptember 26, 2010

Hello,

I've been a regular on Kitchens and Baths for a long time. I went to a couple of tax forums, but decided that before I join another forum, I would pose my question to GW first.

My husband has a business license with a state and federal ID, of course. I have taught fitness classes for over 20 years and was always an employee rather than an independent contractor. I now have the opportunity to pick up a class once a week at a facility that requires me to have my own license as an independent contractor. They wanted me to start Oct. 1, but I can't have a license that quickly. Am I allowed to use my husband's number temporarily? Can he add my name even though mine would be service and his is retail? Is there another option?

I called the state Friday and nobody answered the phone; not even a message machine came answered. I have a feeling they are on the 4 day work week.

Any help is appreciated!

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sushipup1

I hope that you can get an answer tomorrow.

There is a difference between a business license and a state/federal tax ID. Are you talking about a license or an ID number? Two completely different things.

So when you call and ask questions, be sure that you have the correct nomenclature so that you don't confuse things more.

Sorry that I can't help. Hope it works out ok, tho.

    Bookmark   September 27, 2010 at 1:14AM
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setancre

If you only need a federal ID number (these are also used by the states to identify your business) you can do that online now at the IRS website below, which also includes more information about EINs (employer id number).

If you need to be licensed by your state, I would look at your state's website and see if you need a specific license to be a fitness instructor in your area.

See the link below and go to "APPLY ONLINE NOW" to get the EIN. It only takes a few minutes. If you are an independent consultant you are supposed to choose "Sole Proprietor" when you get to business type.

Here is a link that might be useful: IRS federal tax ID link

    Bookmark   September 27, 2010 at 10:40AM
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sushipup1

Also, there are simple 'business licenses' issued by local entities, usually cities. This is different from Setancre's mention of a specific state license for your job, such as cosmetology or massage, for example.

Three different things:
Tax Federal ID number,
state license for your job, if needed, and
city business license, if needed.

    Bookmark   September 27, 2010 at 11:53AM
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houseful

Thank you for the info! I got an EIN through the website. Piece of cake!

I talked with my current boss this morning and she told me that she always considered me an independent contractor and I do get a 1099.

I asked a few others that have their own businesses and they said my SS# should be sufficient. I finally got through to the state and they verified I should use my SS#. I am only providing services and getting paid by the club. No money is received from clients.

Now, I just got an email from this new employer stating that my SS# should be fine and I can start Friday. She isn't the HR gal, so I am not blaming her. However, HR should have told me this from the beginning. Maybe they need more training, I don't know. I have an HR degree too. Maybe this instructor job will segue into something more. Just kidding! I never actually worked in the field as circumstances sent me into an education field.

Anyway, thanks for the help. At least I have the EIN and can start on time. As for a city license, I am not even going to open that Pandora's box!

    Bookmark   September 28, 2010 at 12:30AM
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sushipup1

Great! Congrats on the new job, and I hope it's a great experience!

    Bookmark   September 28, 2010 at 12:43AM
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Billl

I know it may seem like a pain, but you really should go talk to a lawyer about setting up your own company. If you are working as an independent contractor, you have potential liabilities that employees don't.

Also, if you have been working for years and haven't noticed the difference between a 1099 and a w2, you need to see a tax professional immediately.

    Bookmark   September 28, 2010 at 8:33AM
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houseful

Thanks Sushipup.

Billl, I never said I don't know the difference. What I said was I do get a 1099 from my current employer. I have also received W-2's from some of the larger clubs. Every place I have worked has covered me under its insurance; I have never needed to carry my own liability insurance nor have I needed to set up my own company. I didn't understand why this new company couldn't just hire me under a 1099 with my own name and SS# and just require the liability insurance from the beginning. Essentially this is what they ended up doing. For a whopping $9,000 a year, I probably won't waste my time on either a lawyer or a tax professional.

    Bookmark   September 28, 2010 at 6:35PM
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Billl

"What I said was I do get a 1099 from my current employer"

If you get a 1099, you don't have an employer - you have a contract.

If you are going to work as an independent contractor without insurance, well....I wish you the best of luck but I wouldn't recommend it. Whether you realize it or not, you are taking a significant risk. We aren't talking about 9k a year - more like everything you own. We live in a country where anyone can sue anyone for any reason under the sun.

    Bookmark   September 29, 2010 at 1:16PM
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maifleur01

Also so as an independent contractor you owe self employment taxes in the states you have worked and back Social Security unless the companies you have been at reduced your income by these amounts and actually paid the various taxes.

As Bill stated you need to talk to an attorney to establish a company plus a tax person to clear up any back taxes you owe.

Good Luck, sounds like you will need a lot of it.

    Bookmark   September 29, 2010 at 9:00PM
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houseful

I use the term employer because at the present time I only work for her. Everything is covered under her insurance. I am getting the liability insurance I need for this new job I don't owe any backtaxes. And, I don't believe in luck.

    Bookmark   September 29, 2010 at 11:19PM
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maifleur01

1099's do not have a place for Social Security that should have been paid in. If no social security has been paid in other taxes may not have been paid in. In this state about every 5 years or so the state looks at money raising things and people not paying their self employement taxes is high on the roundup list.

Please follow Bill's advice and have someone in your state look at your tax situation. Liability insurance may be the least of things that you should be concerned about.

    Bookmark   September 29, 2010 at 11:47PM
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mary_c_gw

Well, maifleur, actually they do. Most "employers", i.e. the people who have contracted with us aren't obligated to pay or enter any amounts there. It is our responsibility as contract workers. But most of us getting 1099's know that, and still manage to file our taxes correctly.

I worked for years as a contractor for two businesses. Any accountant and ALL tax preparation software programs have all the rules and information needed. OF COURSE I paid my self-employment taxes! And I'm confident the OP did too.

    Bookmark   October 1, 2010 at 10:43PM
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maifleur01

Mary, if the OP did not know the difference between a 1099 and a W-2, see 9-28 at 18:35. I sincerely hope who ever did her taxes knew the difference and paid them but unless the OP can verify that we will never know.

    Bookmark   October 1, 2010 at 11:28PM
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jlhug

Mary, there are very many people who receive a 1099MISC who have no idea that they have to pay self employment taxes on that income. I see them every year in my tax practice.

Form 1099MISC has a block for Federal and state income taxes withheld but there is no block for Medicare or Social Security taxes withheld.

Personally, I think companies that hire people as independent contractors should be obligated to tell the individual that they will owe self employment taxes. Many fail miserably at doing this.

I also know that there are many companies who hire people as independent contractors who should be classified as employees which is a totally different subject.

    Bookmark   October 3, 2010 at 11:28AM
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