Question – I have some things I want to 3D print, paint and sell on Etsy.
I’d like to pay my niece to assemble and paint them; give her like $30 per set, for her time. But I don’t want to hire her as an employee. Can I just pay her for her service? She invoices me and I pay the bill? She’d then file a Schedule C for her independent contractor work?
I don’t want to get into any legal hassle doing this, if there is potential for a lot of accounting overhead for me, it isn’t worth it for me to do it.
Answer – If the work does qualify for 1099 status, be sure she understands she will likely have a tax bill when she files, which is at a minimum of 15.5% for self-employment tax.
Here is a guide about the difference between an independent contractor and an employee. I think the “Behavioral Control” aspect of the criteria is where most people get confused. They think they have a 1099 subcontractor but they really have an employee when they dictate when and where to work and the level of instruction. Here is the guide from the IRS: https://www.irs.gov/newsroom/understanding-employee-vs-contractor-designation