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Tip 10: Subcontractor or Employee?
· One point that helps distinguishes a Subcontractor from an Employee?
Are you prepared to prove to the IRS that you do indeed have a subcontractor working for you and not an employee? What distinguishes an employee from a subcontractor? Is your paper work in order? If not, you could be receiving a shocking letter from the IRS!
· Common Avoidable Costly Error Business Owner's Make…
Let us use the hypothetical situation that you have all the necessary paper work completed by the supposed subcontractor and at the end of the year you mail him/her their 1099 to file with their tax return…this person then decides after calculating what they owe the IRS… that they acted as an employee for the year and not a subcontractor for your business…so they trot down to their local IRS office and explain to the IRS agent that you sent them a 1099 but that they really were an employee…are you prepared for the letter you will receive from the IRS agent?….Are you prepared to defend your position?There are many factors involved, but one of the most distinguishing is…do you tell your hireling when to show up for work?