Accounting for Payments for Individuals


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Accounting: Payments to Individuals


Proper documentation is required for all employees. Failure to provide this documentation can result in fines, fees and additional taxes being assessed. The basics are provided here on how to properly protect your business.  The following describes employees:



W2 Employees

W2 employees are persons who you control, work on your site, follow a schedule, use your tools or equipment, get paid by the hour/salary/commission and are told what and when to do something. These people should fill out a W2 and an I9 BEFORE you allow them to work.


1099 Employees 

1099 employees are persons who do a single job and then are gone, work off site with their own tools or equipment, make up their own schedule, get paid by the job or commission and are not W2 employees.  These people should have their own WC.  These people should fill out a W9 form BEFORE they are paid their first check.



The IRS does not like checks for CASH. CASH should only be used for replenishing petty cash. If anyone gets reimbursed, they should provide receipts, and the check should be issued for the exact amount of the receipts. There will be no check unless there are receipts. Otherwise, the person becomes a 1099 employee. 

The receipts should go in an envelope with the check number on the outside of the envelope. This routine protects you and the person being paid in the event of an audit.


Here is our basic  Business Form


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Akron Income Tax Co.

2215 E. Waterloo Rd. Suite 113

Akron, Ohio 44312

(330) 733-1040

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