Are you one of the many business owners who hires the services of independent contractors, assumes they are independent, and then hears something somewhere that makes you second-guess your instinct?
The confusion over the definition of employee versus independent contractor is not new. Unfortunately, too many business owners rely on their own assumptions or the opinion of others to determine a worker’s status. Tax consequences, workers compensation and liability insurance claims are among the numerous reasons why it’s essential for all employers to know exactly where the relationship with the worker stands.
Interested employers can review the guidelines set forth by the IRS on the website www.irs.gov. Employers can learn the IRS’s common-law rules and details of the three determining categories: behavioral, financial and type of relationship.
Employers who still have questions will also find resources for further clarifying a worker’s status. Employers must also consult state law. An internet search of the state and “employee or independent contractor” may help employers find the various state agencies that govern worker status. Employers who hire workers from other states should consult the services of a tax professional to help determine worker status and its tax implications.
