Cfo Independent Contractor Agreementadmin
What should you do if your company has properly classified workers as self-employed contractors and a worker turns in an SS-8 form that says otherwise? You can continue to treat the workforce as a contractor, regardless of what is written in the IRS destination letter. However, if you are asserting yourself, be prepared for an employment tax review. Your tax and legal advisors can help you, as well as other issues related to independent contractors. Anyone who enters a British business partnership will know, here`s the catch: if you misrecontract an employee who is actually an employee as an independent contractor, your company could charge taxes on unpaid wages, plus interest and penalties. They could also be held liable for employee benefits that should have been granted, but not, including significant penalties under federal law. A worker seeking to determine his or her status as an employee or self-employed contractor may also submit the SS-8 form. Angry former workers are particularly likely to submit the form to show that a company unduly refuses workers` benefits by classifying it as an independent contractor. In addition, there is a historical precedent for classifying these types of workers as self-employed contractors: on the other hand, the status of self-employed contractor is attractive because you do not have to worry about employment tax and you do not have to offer expensive ancillary benefits such as health insurance, old age pension and paid leave. If you pay $600 or more to an independent contractor during the year, you must issue a Form 1099-MISC to report what you paid. This is usually the extent of your bureaucratic responsibility. The federal government and the courts apply an „economic reality test“ when deciding to classify workers as self-employed contractors or employees for labour tax and labour law purposes: employers generally prefer to classify workers as self-employed in order to reduce costs, even if it means less control over a worker`s day-to-day activities.
But the government is looking for companies that classify workers as independent contractors to cut taxes or evade their health insurance obligations under the Affordable Care Act (ACA). Companies are now given a greater incentive to classify new hires as independent contractors: they are downsizing to meet the ACA and thereby reduce their health insurance costs and reporting obligations. You can also submit form IRS SS-8, „Determining the Status of Workers for Federal Labour Tax and Withholding Income Tax.“ Then, the IRS dictates how a work force is classified.