A handful of high-profile cases — and increased attention by the IRS and Department of Labor — has put worker … Read more
In spite of all the challenges with COVID-19, your business may still be in a position to bring on additional workers for your current and/or growing needs. But when it comes to bumping up your resources —whether during economically difficult times or not — is it better to hire independent contractors or employees?
The answer? It depends – largely on your business priorities, your cash flow and the type of relationship you intend to maintain. Not only do independent contractors (often referred to as freelancers, consultants or gig workers) function differently than employees in the workplace, but they’re also viewed differently by the IRS and other government agencies. Let’s break it down to help you make a more informed – and legally sound – decision.
Once you’ve determined whether an independent contractor or employee is a better choice for your needs, you’ll need to be certain you stay within the lines of the worker relationship. If you improperly classify a worker as an independent contractor, you may be liable for back taxes, wages and penalties and possibly face a lawsuit.
Used by the IRS and several other agencies, the “Right to Control” test involves a few key factors with worker classification: How you BEHAVE toward the worker, the FINANCIAL arrangement and the nature of the RELATIONSHIP.
Here are some quick tips to avoid misclassification and legal repercussions:
Learn How to Take a Proper, Legal Stance with Independent Contractors
For more expert guidance on how to manage independent contractor relationships, check out the tip sheet,
5 Smart Tips for Managing Your Independent Contractors.
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At ComplyRight, our mission is to free employers from the burden of tracking and complying with the complex web of federal, state and local employment laws, so they can stay focused on managing and growing their businesses.
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