Contractors vs. Employees

Please review how you classify individuals as independent contractors vs. employees. The IRS and State agencies have been examining this issue and have reclassified independent contractors as employees, thus causing back payroll taxes and penalties to be due. Also, they have required employers to retroactively include a reclassified individual in retirement plans. There are many factors to consider in determining whether an individual is an independent contractor or employee. At a minimum, you MUST file 1099s for your independent contractors to have any hope of being allowed by the IRS to treat them as independent contractors. For subcontractors you use, consider executing a written agreement with them. Remember that independent contractors should have their own workers compensation insurance. If they don't, you may have company and personal liability for injuries.