Some companies work with independent contractors to save time, money and headaches.
However, there are considerable accounting and tax implications if you make the wrong choice regarding a worker’s status.
If you decide to hire an independent contractor and the IRS later reclassifies the person as an employee, your firm can be hit with a tax bill for unpaid taxes, interest and penalties. The company might also be liable for state taxes, unemployment taxes and employee benefits.
The issue is complicated because the IRS and state revenue departments look at many factors in making a determination. Contact us for help. Our professionals can help you avoid costly problems by setting up independent contractor agreements properly at the start of jobs.