2021 is coming to an end - can you believe it? Now is a great time to review your 1099 contractors to make sure you are correctly classifying them according to IRS regulations.
If you classify someone who works for you incorrectly, the IRS can reclassify your 1099 contractors as W-2 employees making you responsible for payroll taxes.
This should scare you but don't worry. This can be avoided if you keep the following in mind:
Generally, an employee is someone that works under the direction and control of the business. A contractor is someone that owns their own business or contracts to provide services to other businesses.
Ask yourself, if any of these apply to you:
Behavioral Control Does the business have the right to control the work done through instructions, training, or other means? If you answered yes, this is an employee.
Financial Control Does the business have the right to control the financial business aspects of the worker's job? If you answered yes, this is an employee.
Type of Relationship Does the business provide the worker employee-type benefits such as insurance, vacation pay, etc? If you answered yes, this is an employee.
Are you classifying your contractors correctly?
We're here for you if you're unsure! Schedule your free 15-minute strategy session with me ---> linktr.ee/jeanetteandrada