Accounting & Bookkeeping & Small Business Forum

[Guest]

At our growing telecom company, one of our sales leaders is paid as a consultant -- the company he owns invoices us bi-monthly for his time at a daily rate. He periodically incurs expenses for the company, for which he is personally reimbursed as needed. However, as the office manager agreed to compensate him for his health insurance as well, he has turned in receipts for his personal health insurance premiums along with his expense reports. I do not know if compensating him personally for his health insurance blurs the line between consultant and employee. Is the better way to handle this for him to raise his daily rate to include this health insurance? I would appreciate any advice you might have.

[Guest]

Anything paid to the consultant should be included in his 1099. It does blur the relationship a bit, but the company has the right to pay him a reasonable fee. A bigger concern is what you mentioned int he first sentence. You said "one of our sales leaders". That seems to insinuate that you have other sales people that are treated as employees. If that's the case, that's a problem. You can't treat people in the same position under different arrangements.

[Guest]

Bryan,
Is the consultant a sole proprietorship or a corporation? If his services are paid to a corporation, then there is no need to do a 1099, right?