With the emergency of many “on-demand” businesses, many of these companies struggle with classifying employees as independent contractors or direct employees. It is critical that you select the appropriate classification due to the fact that misclassification could lead to serious legal and financial liabilities.
Next, here are some main points to remember while classifying your employees according to (NASDAQ:INTU) TurboTax.
Classifying your drivers
Common Law Practices
Consider the amount of control and independence of your drivers in three categories:
1. Behavioral: How much control does the company have over the worker? Does the company say what and how the worker’s tasks are completed?
2. Financial: Does the company or payer keep the business aspects of the worker’s job? Examples are: how worker is paid, if expenses are reimbursed, who provides tools/supplies, etc.)
3. Type of Relationship: Are there printed contracts or employee benefits? Examples are: insurance, pension plan, vacation pay,etc..
Employees |
Independent contractors |
| Tax is withheld on paychecks | Taxes are paid by contractors using an Estimation of Tax |
If you are still unsure then there is the SS-8 form to help determine an accurate choice.
After reviewing the employee vs. independent contractor differences, here are the forms to fill out as an employer, according to the IRS:
Employer Tax Guidelines Per Industry
For certain industries, there are specific employment tax guidelines that must be followed. The IRS provides:
For information on how to ensure company vehicles are not being mistreated, improve driver safety, reduce fuel costs, or how to send optimized routes for your delivery process go to fieldtechnologies.com or, call (888) 803-0200 or, e-mail learnmore@fieldtechnologies.com. Other details on how to appropriately classify workers please visit the IRS page about employee versus independent contractors.