I've discovered that a vast majority of business owners have been classifying their worker or builders, which might create serious trouble in the future. We answer this question by taking a look at substance over form, i.e. the true job, not exactly what responsibilities are composed on paper.
If you surf the IRS site, you'll realize that the IRS sets forth a general principle for specifying an independent contractor. The IRS website says "that the rule of thumb is that a person is an independent contractor if the plaintiff has the right to control or direct only the result of the job rather than what'll be achieved and how it'll be carried out." This is a really wide definition and may be subject to interpretation. Further, the IRS site says "that you aren't an independent contractor if you perform services which may be controlled by an employer (what'll be achieved and how it'll be performed). This applies even if you're given freedom of activity. Again, this may be subject to interpretation.
So as a company owner, how can you make confident you're classifying your employees properly to prevent any unforeseen legal difficulties? You have to have a look at the details of each circumstance, what the employee's job really is composed of. A few of the aspects to consider are: that directs the individual's work? Does he/she possess a boss or operate independently? Can you supply the equipment required for the occupation or does the employee? How are they paid? Are any benefits offered to them? Are they needed to report to somebody or merely supply a completed product? 1 example I'd like to use while seeking to differentiate between an employee and an independent contractor is as follows: Let us say you want your house painted. You inform the painter they will need to paint between 9:00am and 5:00pm, and they could have an hour lunch and you'll offer the equipment to your occupation. You may pay them for several hours worked. This painter will probably be deemed your worker. You pay $3,000 for materials and labor and just care that the occupation is complete in two weeks. This painter will probably be deemed a builder. Please know that this is only such as and is in no way intended to opine about the painting profession.
As you can probably tell, this is a really grey area of the law, however, one where includes high fines if not managed correctly. Whether you're employing independent contractors or personnel is a factual matter, a query which needs to be answered from the beginning to prevent long-term trouble. Don't take this lightly. As a company owner, you ought to be working together with qualified legal counsel or process service Sacramento ca to aid in the analysis and also to help save you money in the long term.
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