federal withholdings for consultants

[lprado]

Is there any way to withhold taxes for a vendor who is doing consulanting work? The consultant has requested federal tax withholding. :confused:

[KrazyKay]

Yes, there is a way to do it, but why? If your consultant can't manage his own business & save for taxes, why do so much extra work that is of no benefit to you. :(

[lprado]

I know that I don't have to do it, but would like to help him. He has been very helpful to us.

[LauraG]

Sure, make him an employee and withhold all the necessary taxes. Issue him a w-2 at the end of the year.

If he has other consulting income then offer to direct deposit into a savings account a portion of his quarterly estimated taxes. Then he can use these funds to pay his taxes.

[gale]

Is there any way to withhold taxes for a vendor who is doing consulanting work?

Answer YES

I do not advocate this process but here are the steps.

Set up the Consultant as a VENDOR and mark off Independent contractor for 1099.

Example
the bill is for $1000 and he wants to have $250 withheld
first line on check is for $1000 to an expense
2nd line is for -$250 to a liability.

The check will be for $750
Next write a 2nd check for $250 Debiting the Liability Account

Also you need to modify the 1099 set up for the Vendors and remove the check mark from the Liability Account.

If you do not do this correctly, you could mess up your books.