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Comment by learc83 | Hacker News Reader

>Most people are not contractors with an established company/legal status as contractors, so you want to hire them.

At least in the US, this isn't a problem. You just make out the check to the individual, and then send them a 1099 at the end of the year. No need to have any kind of established company/status, because by default anyone running a business without incorporating or organizing is operating a sole proprietorship--it's basically 1 extra form at tax time.

As long as the person you're paying is doing business under their name, they generally won't even need to open a second bank account (they might want to if they do this more than occasionally).

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> You just make out the check to the individual, and then send them a 1099 at the end of the year.

Wow, that's awesome. What happens, for example, if someone is unemployed, then doing work for you and either gets sick on his own or gets injured on the job?

In Germany, for an employed person, the medical insurance would cover #1 and the Unfallversicherung (accident insurance) of the employer would cover #2. Let me guess: the (potential) employee is totally uninsured in the US during such an relationship?

>What happens, for example, if someone is unemployed, then doing work for you and either gets sick on his own or gets injured on the job?

For the first case--nothing at all.

For the second case--generally nothing as long as the person is really an independent contractor.

In the US there are guidelines that determine whether someone is an employee or a contractor. For example is the person flexible to work whenever they want, or do they have to be in the office from 9-5. Does the person have to wear a uniform etc. Is the position short term etc...

So if someone were injured on the job, they could claim that they even though the company said they were an independent contractor, they were actually an employee because of xyz.

Most employers know this so they take steps to ensure independent contractors actually fit the guidelines for independent contractor. And in the case of paying a tech contractor for a few weeks, it's usually pretty clear cut.

Unfortunately it's not as easy as that.

The IRS has guidelines on who is considered an employee. If you set their hours, provide equipment for them to use and there's a few other things I forget, they are a de-facto employee regardless of how you pay them: 1099 or W2. This is why a lot of larger companies will not employ sole-proprietors directly. They require you to either go through a contracting company or set up some corporate structure so that you can't claim to be one of their employees.

It's fairly easy. You just have to follow the guidelines. They are also guidelines not hard and fast rules. If you ask a contractor to come in from 9-5 for a week because that's when you're company is open, but it's a short term engagement, you don't buy them a computer, you don't prevent them from working for other companies, you don't offer insurance or vacation, you don't reimburse them for business expenses, and you have a written contract, you're not likely to run into problems.

>This is why a lot of larger companies will not employ sole-proprietors directly.

There are plenty of large companies that do contract directly. For example, Coke does it all the time.

Yeah. This is no different for me being paid to write a book or receiving an honorarium for something while employed by someone.

Yeh but the rates for these 1099 contractors are so low to what I would expect.

What do you mean? I generally made much more per hour when I was working as a contractor.

I've see quite a few comments on the workplace stack overflow where a 25-35% premium for contractors was considered generous and considered "normal" for the USA instead of the 200% / 300% id expect in say the UK

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