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Thread: Under the table employees?

  1. #11
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    Quote Originally Posted by Business Attorney View Post
    Classifying people as independent contractors for tax purposes is getting harder and harder. I have an article on my website Independent Contractor or Employee? that tries to explain it in simple language but the bottom line is that it would probably be very difficult to structure your operation so that the worker would really be an independent contractor.

    As Ray (turboguy) pointed out, characterizing a worker as an independent contractor can have other serious ramifications.

    Unless you are 100% sure that the person is an independent contractor, you will be much better off treating them as employees.

    Another note on paying cash: wage and hour laws apply to employees and you have to be able to produce appropriate records if you are challenged. If someone claims that they were not being paid the minimum wage or that they were not paid time-and -a-half for overtime and you have no records to refute their claims, you may end up paying money that you could have avoided if you had records to support your position.
    Thanks for the article, it did make me understand more about this. As for what they can be classified as, I did some research and came across labeling them as a Statutory Employee which I posted below. It seems right for what the link says to be able to withhold the taxes for.

    https://www.irs.gov/businesses/small...tory-employees

  2. #12
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    Unless they do one of the tasks described, they aren't statutory employees.

    Are they:

    • A driver who distributes beverages (other than milk) or meat, vegetable, fruit, or bakery products; or who picks up and delivers laundry or dry cleaning, if the driver is your agent or is paid on commission.
    • A full-time life insurance sales agent whose principal business activity is selling life insurance or annuity contracts, or both, primarily for one life insurance company.
    • An individual who works at home on materials or goods that you supply and that must be returned to you or to a person you name, if you also furnish specifications for the work to be done.
    • A full-time traveling or city salesperson who works on your behalf and turns in orders to you from wholesalers, retailers, contractors, or operators of hotels, restaurants, or other similar establishments. The goods sold must be merchandise for resale or supplies for use in the buyer’s business operation. The work performed for you must be the salesperson's principal business activity.


    Small Business CPA
    "A tax loophole is something that benefits the other guy. If it benefits you, it's tax reform."

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    ^That is true, I must've read a bit too fast. I guess I will have to see how I can do this. This job is normally paid on the spot after a days work so I will have to see how I can do this since I don't think anyone would want to wait for a paycheck in this type of job. Or I guess to hire them as part-time since I am not trying to really provide any benefits

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    Some states require you to pay worker's company insurance for independent contractors unless they have provided you with a copy of their insurance certificate showing they already have insurance. If you decide to go the route of independent contractors, have them fill out a W9 form, even if you do not think they will more than $600. It's easier to get the info up front than it is trying to chase them down for it at a later time should you need it.

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    What a great idea for a business! Just one question.....if you are mobile, where do you get the water from? Anyway, my suggestion would be to get regular employees and pay and keep records correctly. What are the rules to provide insurance if you hire part time? In my opinion, cutting corners always has a way of biting people in the butt. Charge more for the extra expense, but have piece of mind.......

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