Posts Tagged ‘1099-MISC’

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Independent Contractors vs. Employees

In Accounting & Finances,Business,Taxes on January 19, 2014 by Sufen Wang Tagged: ,

MH900251655Court Rules Back Wages Must Be Paid

Well, Folks, it’s that time of the year for 1099 processing for all of the people who worked for you in year 2013, who are not your employees, but provided a labor service for your business.  

What is the fine line separating an independent contractor from an employee?  Here’s a recent court ruling for you as some food for thought…

100711_stripclubAre you smarter than a stripper? Only if you know the difference between an independent contractor and employee. And if you can find all the stripper puns to come. (Extra points if you find ones that aren’t there.)

Unique S. Butler sure knows that exotic dancing is no joke. Known as “Dior” at Norma Jean’s – the Baltimore strip club she worked at from 2007 until being fired in August 2012 – Butler filed a lawsuit in U.S. District Court in February against the club and its owner, PP&G Inc. She bared all, saying the club didn’t pay her wages for her hard work.

Wages are those things you’re supposed to get when you put in seven-hour shifts at a business up to seven nights a week. Which was Butler’s schedule at Norma Jean’s. And this was on top of paying a $45 tip-fee to the club each day, along with $20 if she was late.

Norma Jean’s legal retort: all its dancers chose to be classified as independent contractors. Dancers work on their own schedules, not in shifts, and those fees are used for stage upkeep and use of a locker and DJ equipment.

gty_cash_pile_mi_130722_16x9_608That limp explanation didn’t fool the court. Judge William M. Nickerson determined that Butler was an employee because the club controls the flow of customers, requires no specialized skills, and relies on the exotic dancers for its business. So under federal law Dior is entitled to back wages for all her full-frontal, up-and-down, and side-to-side work, and damages, which will be decided at trial.

2049877This article is just the tip in terms of understanding how employees and independent contractors work…it. The bottom line is that the line between the two can be blurry at times, and not just because you’ve had too many drinks. You can find out more about the independent contractor risky business here and all of the responsibilities it in-tails, ahem, entails.

Sufen Wang, M.S.Accountancy
Wang Solutions, Long Beach, CA (562) 856-0793
Editor: Hannah Huff, M.F.A. Creative Writing: Poetry, (626) 806-5805

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Going Rogue:

In Accounting & Finances,Business,Taxes on May 11, 2011 by Sufen Wang Tagged: , , , , , ,

The Risks and Responsibilities of Hiring Independent Contractors

 

America: it’s the land of the free and the home of the brave. We Americans pride ourselves on our independence, and, now, with the economy still slowly making its way towards recovery, more businesses are hiring independent contractors than ever, and more people are working as independent contractors than ever.

I recently came across this article by Ronda Jones of Forrest T. Jones & Company. It’s all about what you need to know before you hire an independent contractor or accept work as an independent contractor. It’s a helpful article, and if you’re thinking about hiring an independent contractor, you should definitely give it a read. But here are some tidbits to whet your appetite.

If you’re thinking about hiring an independent contractor:

    • Consult an attorney and draw up a basic work contract. Make sure that it includes a “hold harmless” clause, a non-competition clause, and insurance clauses, and make sure that it addresses jurisdictional issues in your city and state.
    • Make sure that the independent contractor has adequate insurance to cover their work.
    • Consult your insurance agent to see how hiring an independent contractor will affect your coverage.
    • Request and retain invoices from your contractor.
    • You may also want to run a background check or even run an internet search to make sure that there aren’t any unpleasant surprises in store for you.
    • Make sure that you know how to issue Form 1099-MISC at the end of each tax year for your contractor.

If you are working as an independent contractor:

  • Review the company’s independent work contract. You may want to have your attorney go over it to make sure that it’s okay to sign. Make sure that you are only held accountable for liabilities resulting from gross negligence or willful misconduct. You may also want to insert a liability limitation cap so that you aren’t still held liable for errors or omissions that are discovered years down the line.
  • Ask the employer for copies of their certificates of insurance so that you can make sure that they have general liability and auto liability insurance, if applicable. You should also ask to be listed under their professional liability or errors & omissions insurance, if applicable.
  • Keep a log of the projects you’ve worked on, just in case your involvement is ever called into question.

Ask the contractor periodically to meet and review the terms of the contract to make sure that it adequately covers the work that you’re actually being required to do.Working with an independent contractor is a great way to save money for services you need, compared to hiring someone full-time that you don’t really need full-time. Working as an independent contractor is a great way to get work during times when work is difficult to find.

And if you go about it the right way, then neither party will have to hire Chuck Norris to take out the other.

  • On the Money,
    Sufen Wang
    Wang Solutions