Are You Classifying Independent Contractors Correctly?

It is absolutely crucial to classify labor correctly. Proper record keeping will ensure that you aren’t in hot water with the IRS come tax season. There are some simple ways in which to determine whether an individual is an employee or independent contractor, but many small business owners are tempted to classify workers as independent contractors regardless of the working relationship in order to:

  • Avoid payroll taxes
  • Avoid the hassle of processing payroll and the need to maintain detailed records
  • Minimize employee liability
  • Maintain a flexible working relationship

A Contract May Not Be Enough

Most business owners assume that a contract is sufficient grounds to classify an individual as an independent contractor, but that isn’t always the case. FedEx was accused of miss-classifying more than 2,000 drivers earlier this year, and the company will owe millions in penalties as a result. 

DEKE Business Bookkeeping can help you to classify labor correctly, and with our new payroll service offerings, maintaining employees may be a whole lot easier than you previously thought! Email to schedule a complimentary call.