Help with the Help

[cbrown71]

I have a sole proprietorship that I work alone at, lately I have been paying a guy $25 a week to help me on my busy day it only takes him 2 hours. Can I deduct his money from my profit/loss as an expense if so how do I keep track for my taxes I pay him in cash, and do I have any responsibility as far as reporting his income it totals a little over 1200 per year.

[Betty]

I am not an accountant, and it would be worth it to you to hire one for a couple of hours. That said, assuming you are in the US:

"Can I deduct his money from my profit/loss as an expense..."
Yes

"...if so how do I keep track for my taxes I pay him in cash..."
Keep track however you track your other business expenses. A simple spreadsheet (or even a notebook if this is your only expense) would do the trick.

"...do I have any responsibility as far as reporting his income it totals a little over 1200 per year."
Yes, you probably need to issue him a 1099 form at the end of the year because you are paying him more than $600 in the year. You also send a copy of the 1099 to the IRS. So that you have his information and can fill out the 1099, you'll need to have him fill in a W9 form. (Google for the forms.)

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[Freelancier]

Surprised this question evaded anyone answering it.

It depends on the country where you live as to your reporting requirements. In the USA, it's $600 per year and then you have to report it.

And, yes, if you pay something, you can take it as a deduction provided you have documentation that you paid it. Paying in cash with no receipt is not going to work for documentation. Paying by check or eCheck or wire transfer provides that documentation.

[vangogh]

It actually was answered, but the post was moderated and I missed it so no one else could see the response.

I would probably talk to an accountant to be sure. It is $600 here in the US and if the person you're hiring isn't in business for himself, you might need to report him as an employee. You can take a deduction, but again an accountant might be worth talking to.