Are you classifying contractors properly? Do you know when it is permissible to pay someone as a subcontractor (aka 1099) versus employee?
I just received a “cheat sheet” from Corrine Nadolny of Paychex. The document gives an explanation of some rules about when your company should be adding works to the payroll – and when it might be permissible to pay them as independent 1099 subcontractors.
The main issue with these rules is that generally companies don’t withhold employment taxes on 1099 subcontractors. That makes it cheaper for a company to classify a worker as 1099 vs full employee.
Correctly classifying workers BEFORE they start work is the key. Download this free document and review some of the key items to consider when making these classifications. And as always, please refer to your tax or legal professional for final assistance with determining employment status.
Employee vs. 1099 Independent Contractor (PDF)
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