Employing Others Is Linked to Wealth and Wellbeing

>But I'm not on a contract or 1099 - the customer just sends me work and I invoice for it.

Assuming you mean the U.S. 1099-NEC tax form, you most certainly are "on 1099". If your client is not issuing one to you every year, they are breaking the law and subject to penalties.

Suppose I was a machine shop rebuilding engines for mechanic shops. They send me busted engines, and I send them working engines and invoices, which the customer pays. I'm on the hook for a warranty if the engine fails due to my mistake. There is no need for a 1099. Why is that?

In my case, the client sends rough and noisy data from CMM devices, and I return smoothed and rationalized designs and invoices, and I'm financially on the hook for mistakes that cause rework. How am I legally different from the machine shop?

Don't say single customer, since that seems irrelevant. I'm free to sell to other customers, including my customer's own competitors.

If you can cite specific documents or laws, that will help.

I would also like to know your reasoning for why you think I'm self employed rather than a NEO. You just state your view, but that doesn't explain the principles you're applying.

I also don't understand your reasoning as to why you think I'm committing or helping my customer commit employer tax fraud. I own my own process, intellectual property, and material assets. I have to service my liabilities, I'm on the hook if I cause damages, and I am free to sell to competitors. I am clearly a sole proprietor. The question is how I fall in the article's classification.

If you would please explain your reasoning behind these things, that would help me decide whether your analysis/implied advice is helpful to me. Thanks!

Because it's the law. Per IRS instructions for Form 1099-NEC[0], which applies to your customer:

   File Form 1099-NEC, Nonemployee Compensation, for each person in the course of your business to whom you have paid the following during the year.
   • At least $600 in:
   1. Services performed by someone who is not your employee (including parts and materials) (box 1); or
   2. Payments to an attorney (box 1). (See Payments to attorneys, later.)

I wasn't stating my view regarding NEO, I was trying to apply the sloppy, partly overlapping definitions provided by the article. The term "self-employed" is pretty well understood and referenced in the tax code; the term "NEO" is just something used in this article to draw some unclear (to me) distinction. If you talk to your state's employment development department, a tax professional, or a banker, they will probably not understand what you mean by "NEO".

> I am clearly a sole proprietor.

The rules are pretty well established, and come down to what tax people call "facts and circumstances". Per IRS Pub 15-A,

"To determine whether an individual is an employee or an independent contractor under the common-law rules, the relationship of the worker and the business must be examined. In any employee-independent contractor determination, all information that provides evidence of the degree of control and the degree of independence must be considered.

Facts that provide evidence of the degree of control and independence fall into three categories: behavioral control, financial control, and the type of relationship of the parties."

See Pub 15-A for a more detailed discussion.

> that would help me decide whether your analysis/implied advice is helpful to me

I did not give you any advice, I was only trying to explain what the rules are and how they are applied. If you pay your full tax obligation including self-employment tax, and neither you nor the firm are ever audited, you will probably do just fine. You are missing out on employment benefits such as worker's comp, unemployment insurance, overtime, paid vacation/sick leave, etc. but you don't seem to mind.

[0]I could look up the actual tax law but don't need to spend that time for this purpose.

It used to denote a middle class stratum between the peasants and the aristocracy, or even just city dwellers.

However, I use it in the Marxist sense, to refer to the current capitalist leadership and ownership class, which emerged during the industrial revolution.

Homeowners and small business owners are petit bourgeois - little bourgeois/middle class. This is different from the haute bourgeois - high bourgeois/upper class.

During times of stability, the petit bourgeois want what the haute bourgeois want, and aspire to become haute bourgeois. During times of instability, the upper class tramples the middle class, turning them into an enemy.

I think we're entering a time were petits no longer really expect the hautes to help them. And I think that's a good thing, since that makes petits more likely to help revolutionize!

as per the other comments, clearly 1099 does apply. i only briefly looked at a short description and missed the key line "other income".