Page 11 - Upper Peninsula Business Today -- July 2019
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Tax Tips: Employee? Independent Contractor? How To Keep It Legal
If a worker fits the IRS’s criteria for an employee, a business can’t call the worker an independent contractor.
Small business owners who want to use inde- pendent contractors need to be sure these work- ers really aren’t employees.
Federal and state government agencies are on the lookout for businesses that use independent contractors, or freelancers, to evade Social Secu- rity, Medicare and unemployment taxes and workers compensation and disability insurance. Companies that are audited and determined to be using employees misclassified as independent contractors face fines.
“The penalties for non-compliance can be significant,” warns Wendy Silver, owner of Beyond the Workplace, a human resources con- sultancy based in Needham, Massachusetts. She suggests owners consult an attorney to before classifying a worker as an independent contrac- tor.
The IRS has criteria by which it measures who’s an employee and who isn’t. Much of the criteria has to do with control over the employ- ee. For example, who determines where and
when the worker is at work? How closely is the worker supervised? Who purchases tools and supplies? Can the worker do work for other peo- ple or compa-
nies? Is the worker paid by the hour, week- ly or other time period, or instead receives a flat fee?
The IRS, as
it does in many issues, looks at the totality of cir- cumstances. So if all the criteria point toward the worker, for example a graphic artist, being an independent contractor, the fact that the worker is paid by the hour won’t necessarily turn this into an employer-employee relationship.
The relationship itself is another key factor. Are the services the worker provides a key aspect of the company’s regular business? Officials might look to see how the worker’s assignments compare to those of a company’s full-time staffers.
“But make sure they’re not doing the same thing as your employees,” suggests Michael
Boro, a consultant with PwC whose expertise is in workplace issues.
Owners can find out more about the govern- ment’s criteria on the IRS website, Companies can be
audited randomly, or federal or state offi- cials could be tipped off to possible mis- classification in
other ways. If there’s something suspicious about the 1099 forms sent to independent con- tractors, the IRS might want to investigate fur-
ther. State officials often look at unemployment tax payments. If an independent contractor sues the company, the government might want to investigate.
Some owners might want to use an independ- ent contractor rather than temporary employee. But the two are not interchangeable, warns Kyle Lawrence, owner of Berkshire Payroll Tax, a Sandisfield, Massachusetts, company that helps businesses comply with employment tax laws. If the worker fits the government’s criteria for an employee, a business can’t call the worker an independent contractor.
The IRS has criteria by which it measures who’s an
employee and who isn’t.
Without advertising something terrible happens -
~ P.T. Barnum 906-786-2021
THE DICKINSON AREA Chamber of Commerce’s ribbon-cutting ceremony for Norway Sleep PLLC. From left are Chamber ambassadors Teresa Schettler, Sandy Petroff, Tamara Juul, Ray King, Kristina Jandron and Karen Blackhall; Dr. Carl Smoot; his wife, Tammy Smoot; ambassador Chris Hanley; and Suzanne Larson, executive director, Dickinson Area Chamber of Commerce. (Chris Tomassucci/Daily News photo)
Dickinson Chamber Has Ribbon Cutting For Norway Sleep
NORWAY — The Dickinson Area Chamber of Commerce recently hosted a ribbon-cutting ceremony for Norway Sleep PLLC, a sleep center opened by Dr. Carl Smoot in Norway.
Smoot will be able to take the patient’s history, perform a limited physical exam and discuss the issues that are found.
Smoot is board-certified in sleep medicine, pulmonary disease and internal medicine. He has been certified in medical hypnosis, which he uses for help with sleep disorders.
Smoot will be able to dispense all supplies and tests for sleep patients.
Home sleep testing is done with Cleveland Med Home Sleep Testing Units for overnight
studies. Very rarely would an in-center sleep study be needed.
He will conduct Continuous Positive Airway Pressure, or CPAP, downloads on all patients
currently using equipment and make adjustments as needed.
His office is Suite 2 at 415 W. U.S. 2 in Norway. He can be reached by calling 906-563-
1359 or 906-563-5871.

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