Employee or independent contractor? It can be a tough decision …with expensive questions if your company makes the wrong one. To make the right classification faster and with less hemming and hawing, try this.
In most companies the decision whether to pay a worker as an employee or independent contractor is left in the hands of department managers. Makes sense — they know what that individual will do for your company day in and day out.
What department managers aren’t: experts on IRS requirements.
No doubt Finance gets its fair share of classification questions.
And while you want to help, you can’t afford to have staffers repeatedly interrupted with the same types of questions. But if you can train the departments to answer those questions on their own, everyone will be the better for it.
The solution? Create a mini “crash course” on worker classification, then post it somewhere everyone can refer to it, like a company intranet.
Must-includes:
- definitions and tax consequences, for both employees and contractors
- IRS’s “3 controls” test
- industry-specific examples, and
- any legal precedents.
(Be sure to put it all in plain English.)
Of course, you’re still going to double check that the correct classification was made. But you can do it in a lot less time knowing that educated decisions were being made from the start.
