If I had to identify the most important decision a company must make about how an individual must be paid for the services provided by him would classifying the person as an employee or an independent contractor.

Incorrectly classifying employees as independent contractors can create serious long-term liabilities to a company. If an individual is the company as an independent contractor is later determined to have been employed by the IRS or the state of Florida, the employer may be liable for payroll taxes that should have been withheld from the person with the employer's taxes should have been, and sanctions for nonpayment of taxes.

Many new businesses look to cut costs by using independent contractors instead of employees to deliver services vital. By using independent contractors to save on payroll taxes, workers compensation insurance and employee benefits. Proper Use independent contractors can save some money for business, but be careful, just because someone calls an independent contractor does not make them one.

In general, an independent contractor is a person who is in business for himself and maintains the independence of the company he or she is performing the service for that while an employee who works and provides services under the control of the company receiving the service.

The IRS and the state of the classification of workers Florida based on common law factors used to measure the amount of control the company has the right to exercise over the worker. Two frequently cited factors of an employment relationship is that the business is maintaining the right to dismiss workers at will and / or the company is providing the tools at work and a place to work. In comparison, people who are truly independent contractors generally provide their own tools and workplace, they have business licenses, and are dedicated to carrying out specific projects and can not be fired without cause of a specific project. There are no hard and fast rules as to who is an employee and who is an independent contractor. All possible factors related to control of the company and the autonomy of the worker should be taken into account.

Because you can see, there is no easy answer as when an individual is considered an independent contractor. However, there are no penalties or liability for Misclassification independent contractors as employees. As a general rule in cases of doubt the safest classification can be chosen from employees.

About the Author:

Nationally known tax, business, and financial consultant, Steven J. Weil, PhD, EA , is much sought after as a guest speaker and workshop leader. He has appeared on Good Morning America and is heard on South Florida radio with his “Daily Tax Tip.” His PhD is in Business Administration and he is also enrolled to practice before the Internal Revenue Service. Steven teaches classes for various colleges and universities on business, tax and financial management. He has provided programs for large and small franchise groups ranging from key note address to hands on work shops.

If you are looking for a professional tax preparer and payroll services company please contact Steven Toll Free at (800) 382-1040. He has extensive knowledge in the field and can help you with your payroll tax preparation and IRS tax preparation.

Article Source: ArticlesBase.com – Employee Or An Independent Contractor?

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