With a 1099, the company can write off the entire ammount that they pay you, thus reducing thier taxes. As for the materials, they have no idea of the cost of the materials. If you mark-up your materials, this too must have taxes paid on it. On the other side, when you get the 1099, it shows the sales you made with the company for the year. Then you deduct the ammount that you paid on materials, and "WALA" you are paying taxes only on the labor and the mark-up! Hope this helps!
Virgil, Unless you are incorporated, they have to give you a 1099 for any work over $599. The companies that don't do it are the ones in the wrong. It is your responsiblity to provide documentation of the material and other expenses(helpers) to deduct. The easiest thing is to incorporate and then the 1099 can go in the circular file, your tax return will be more expensive, but limited liability is worth it IMHO.
Electric Eagle is correct here. Anytime a business pays $600 or more to another business they must file a 1099 unless the other business is a corporation. The same rule applies to you. If you sub contract out $600 or more worth of work to one subcontractor you must file a 1099 on them or the IRS may disallow the expense and hold you liable for the subcontractors taxes. Most businesses will ask for your tax ID number before you start working for them or before making payments for this reason. Since you now have a helper I assume you have a federal tax ID number to use for payroll. You can give other businesses this number instead of you personal SSN number.