Is Your ‘Independent Contractor’ Actually an Employee?

Posted in Blog, Business Law by on April 9th, 2013

doingtaxes-lgTax season is upon us, and small business owners may be feeling the pressure that many people associate with tax time. Sorting receipts, filing paper work, making sure that everything is in order.  If you are a small business owner and have employees or independent contractors, there are some important things you should know about how you file for them.

Many business owners may classify their employees as ‘independent contractors’, which means that they are not obligated to pay their employees overtime, have workers compensation policies in place, and they do not withhold taxes on behalf of the employee. If a small business owner is wrongfully classifying an individual as an independent contractor when in actuality they are an employee, it could have serious civil and criminal consequences for the business owner or the persons responsible.

When is someone an Independent Contractor?

According to the law, if someone is to legally be considered an independent contractor they must meet three criteria. 1.)They must have minimum supervision and instruction and dictate their own hours. 2.) The individual’s work must be part of a separate and distinct business- not something that is in the “usual course of business” of the employer. And 3.) The individual cannot be dependent on one employer for the continuation of services.

taxes_medium_primaryimageIf any of these criteria are not met, then the individual is considered an employee under law. If you are a small business owner in the Raynham/Taunton area and have employees that you have classified as independent contractors, or employees that you think could be classified as such, it is important
speak with a qualified business lawyer
to ensure that you are operating lawfully.

At Wynn and Wynn, we have the industry knowledge you need to assist you in the operation of your business. If you have any questions, call us at 1-800-852-5211 or click here to schedule your free consultation.

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