New Crackdown On Using Independent Contractors

One of the biggest gray areas in a small business is whether a worker should be classified as an employee or independent contractor. Naturally, employers would rather treat a worker as an individual contractor because they don’t have to withhold taxes or pay for benefits like health insurance. But, with new regulations in place the IRS is attempting to clamp down on those companies that classify a worker as an independent contractor where the employer/employee relationship exists. Companies need to be very careful in this area as the IRS is starting to assess significant retroactive penalties.

This article from Forbes explains how the IRS determines whether an individual is an independent contractor or employee and the common characteristics that identify these classifications. Continue reading.