Failing to know the difference between an employee and an independent (1099) contractor can be costly, with stiff financial penalties, and even jail time for the most flagrant violations. Fortunately, the IRS and DOL provide resources to help employers correctly classify the people who work for them.
IRS Small Business Virtual Tax Workshop
The IRS’ Small Business Virtual Tax Workshop offers small business owners eight lessons on topics relevant to business owners – including worker classification. The course titled, “Federal taxes when hiring employees or independent contractors” provides an excellent guide for determining whether workers should be paid as a W-2 employee or 1099 independent contractor.
The US Department of Labor provides additonal resources pertaining to employee classification on their website, including a quick reference chart showing the main differences between employees and independent contractors and an explanation of the most common myths about worker classification.
Accupay has written several articles over the years dedicated to the topic of worker classification. Visit our blog and search for the keyword “1099.”
Here to Help
While the ultimate decision and responsibility for classifying workers belongs to the employer, AccuPay’s team of payroll and tax specialists is always happy to assist with your questions and concerns. Contact us at 317-885-7600 or firstname.lastname@example.org.
This PayDay is for educational purposes only and does not constitute tax and/or legal advice. Any links to external resources are for educational purposes only. AccuPay is not affiliated with nor receives any renumeration from any outside sources. Please consult with your tax and/or legal advisor before applying any suggestions made here or through external links.
Thank you Larry & Accupay for helpful information. The links were all very informative and clarified several questions and misperceptions I had. Very much appreciated.