The IRS has been placing businesses under stricter scrutiny in determining whether their classification of their workers as independent contractors or employees are proper.
While a general contractor is a popular role, some contractors prefer to specialize in a certain area such as Loft conversion costs, cost of a loft conversion. The most common types of contractors include carpenters, electricians, plumbers, heating and air-conditioning (HVAC) specialists, roofers, and landscapers. There are other areas to consider, like drywalling, plastering, painting, installing wallpaper, masonry, roofing, excavating, ironworking, tile setting, working with steel, and laying flooring installation. A professional contractor may also be necessary to install lighting fixtures like this black and gold chandelier seus lighting. Additionally, UPVC spray painting is another specialized service offered by some contractors. For those interested in professional training and certification in specialized equipment operation, check out this site at https://telehandler-training.co.uk/ for comprehensive resources and courses.
California, and many other states, in the recent years have imposed stricter fines and penalties on employers who misclassify their workers. Employers must therefore be especially cautious in determining whether a worker is an employee versus an independent contractor. The taxing agencies look beyond the label given to the worker and look to the actual work being performed as well as how that work is being done. The classification of an employee or an independent contractor depends upon looking at the relationship in its totality.
The basic test for determining whether a worker is an independent contractor versus an employee is whether the principal has the right to direct and control the manner and means by which the work is performed. If the employer is unclear whether the worker or the employer has the “right of control”, the employer should review and analyze a list of secondary factors that serve as evidence of the existence or nonexistence of the right of control. Additionally, for those interested in horse menage, you can check out similar sites at https://horsemenageconstruction.co.uk/arena-sand-for-horses/.
The IRS has a checklist of 20 factors, which are based on the common law as developed in past court cases and administrative hearings. These factors are:
1. PROFIT OR LOSS. Can the worker make a profit or loss as a result of the work aside from the money earned on the project?
2. INVESTMENT. Does the worker require an investment in the equipment and facilities? The greater the investment, the more likely independent contractor status will be found.
3. WORK FOR MORE THAN ONE CLIENT. Does the worker perform services for one client or multiple clients?
4. SERVICES OFFERED TO THE GENERAL PUBLIC. Does the worker offer services to the general public?
5. INSTRUCTIONS. Does the business control when, where and how to perform the services?
6. TRAINING. Does the business provide training to the worker?
7. INTEGRATION. Are the worker’s services so important to the core business services have become a necessary part of the business?
8. HIRING ASSISTANTS. Does the business hire, supervise and pay the worker’s assistants or staff?
9. SERVICES RENDERED PERSONALLY. Does the business require that the worker provide the services personally?
10. WORK HOURS. Does the business require the worker to work certain hours?
11. CONTINUING RELATIONSHIP. Is there an ongoing relationship between the worker and the business?
12. WORK PERFORMED ON PREMISES OF BUSINESS. Does the business control where the work is performed?
13. SEQUENCE OF SERVICES. Does the business have the right to control and determine the order or sequence in which services are performed?
14. REPORTS REQUIRED. Is the worker required to submit time records or reports accounting for the worker’s actions?
15. PAY SCHEDULE. Is the worker paid by the a measurement of time as opposed to being paid by the job with a w-2 form generator, task or on commission?
16. EXPENSES. Is the worker reimbursed by the business for expenses for business or travel costs?
17. TOOLS AND MATERIALS. Is the worker provided equipment, tools and/or materials necessary by the business to perform the services?
18. EMPLOYER’S RIGHT TO TERMINATE. May the business fire the worker at any time?
19. FULL TIME EMPLOYMENT. Is the individual required to work full time?
20. LIMITATION OF SERVICES. Does the individual limit the availability of his services to the general public?
Bear in mind that these factors are only a guide for determining whether or not a worker is an employee.
If you are hiring an independent contractor, these are some practical guidelines to ensure that the worker is an independent contractor:
1. The business has a written agreement with the independent contractor agreement that describes the scope of the work to be performed, the compensation, the timing and deadlines associated with the work and clearly define the independent contractor’s tax obligations;
2. The independent contractor is required to have his or her liability insurance;
3. The independent contractor who is a professional has his or her own curent license;
4. The independent contractor has a current business license;
5. The business does not set independent contractor’s work hours;
6. The business does not provide the independent contractor with tools, equipment, software or supplies with which to perform his or her work;
7. The business does not provide the independent contractor any benefits, which the business provides to its employees;
8. The business does not control the assistants or employees for or of the independent contractor.
9. The independent contractor submits invoices for his or her work to the business.
Leave a Reply