Essentially, I started an LLC about 6 months ago. I have worked pretty closely with another developer, but so far have yet to pay him. We are developing a product right now and I have agreed to give him a percentage of sales (after apple's cut). This is all in the US. I'm trying to make sense of when I'll need to have him complete a W-9, and whether I need to fill out a 1099-MISC. From what I have read here and on the IRS website, (this page http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Forms-and-Associated-Taxes-for-Independent-Contractors), it sounds like I have to have him fill out the W-9 and then fill out a 1099-MISC. One question I have is how often do I have to fill that form out? The first time I pay him more than $600, and every time after?
We are going to start another project, and on this one he would essentially work for an hourly rate, which would be paid to my company, and I would then filter that amount to him. Are there tax implications here I should be thinking about? Do I need to filter some off the top to pay for taxes on the amount coming in? Is this even the best way to approach this situation?