- 1 INDEPENDENT CONTRACTOR
- 1.1 Advantages and disadvantages
- 1.1.1 Prevent IRS Problems
- 1.1.2 Is This Your Company?
- 1.1.3 Independent Contractor Background
- 1.1.4 Independent Contractor A Target
- 1.1.5 Advantages of being a self-employed Independent Contractor:
- 1.1.6 Disadvantages of being a self-employed Independent Contractor:
- 1.1.7 Set Your Business Up To Prevent Problems
- 1.1.8 The type of business entity you choose can have a big impact
- 1.1.9 Set Up Your I.C. As A Corporation To Be Safe
- 1.1.10 Your business must be run and controlled under some very tight guidelines
- 1.1.11 The Small Business Solution To ObamaCare
- 1.2 Independent Contractor
- 1.1 Advantages and disadvantages
Advantages and disadvantages
Tips for Small Business Owners
Prevent IRS Problems
The following information is extremely important, and extreme care should be exercised in following the procedures outlined by the IRS guidelines.
Is This Your Company?
Some small businesses utilize Independent Contractors as opposed to Employees, but have not set up the proper contracts and are not following the IRS guidelines. This can be extremely dangerous!
Independent Contractor Background
The Independent Contractor device can be a fantastic tool for the business owner as well as the Independent Contractor (I.C.). However, it can also be a very dangerous device if not set up and run correctly according to IRS regulations.
There can be potentially devastating tax consequences if disallowed by the IRS or any state agency. It cannot be overemphasized that you must learn and follow the guidelines set by the IRS.
Independent Contractor A Target
At this point in time, all government entities (including the states) are desperate for tax revenue. The Independent Contractor relationship is a prime target as are all small businesses.
Advantages of being a self-employed Independent Contractor:
Self-employed — You are the boss.
Work your own hours.
No federal or state tax is withheld from your pay.
You have ability to write off all business expenses.
You are usually paid more than an employee in the same position.
Disadvantages of being a self-employed Independent Contractor:
Personally liable for your own business debts.
No job security.
No unemployment insurance benefits.
No employer-provided workers’ compensation.
Must pay self-employment taxes.
Minimal labor law protection.
Set Your Business Up To Prevent Problems
If you are really serious about operating as an independent contractor, or hiring I.C.s without incurring problems with the various governmental agencies, then it is vitally important that your business be set up properly from the outset. This includes your own business as an Independent Contractor.
The type of business entity you choose can have a big impact
For example, if you are an Independent Contractor and are unfortunate enough to face an audit by the IRS; the type of business entity you have chosen for your business will have an effect on how the IRS views your business relationship.
Set Up Your I.C. As A Corporation To Be Safe
You will have a better chance of sustaining your Independent Contractor relationship with the IRS if your operational entity is an LLC, C-corporation, S-corporation, or PC. It is more likely to be viewed as a separate business entity than a sole proprietorship.
Your business must be run and controlled under some very tight guidelines
The Small Business Solution To ObamaCare
If you are a Small Business Owner and are seriously concerned about the coming impact of “OBAMACARE”, then you may want to look at a website that offers some ideas on how to use Independent Contractors to circumvent the onerous regulations.