Independent Contractors

Question: Independent Contractors? I am looking to hire employees but only as independent contractors. How do I do that? The positions I offer are commissions only. can anyone help? Thanks!

Answer: Real estate or insurance? You are not looking for employees then. You are looking to contract with agents to sell your product. The simplest way is to find people who are willing to sell this way, knowing that your product is not the only one they will have available for customers. For each sale, they receive a percentage, higher than if they were working out of an office as an employee. If an in-office employee were to receive a 3.5% commission, the type of sales agent you are looking for would be more in the 10% range.

Question: How do I claim independent contractors? I own an agency and I get gigs for independent contractors. Clients would pay the agency using my Tax ID and I would then pay out the independent contractor. Keep in mind I get a percentage amount of the gig that I get for the independent contractor. How would I claim the independent contractor on my income taxes because our clients send a 1099 to my Tax ID and not the independent contractor? Would the independent contractor be an expense for my business or how would I claim them?

Answer: You report the amount shown on the 1099's that you receive as income on Schedule C. You deduct the amount that you paid to the independent contrators on the "contract labor" line of Schedule C, leaving a net profit of the amount that you kept. You also give each independent contractor a 1099 showing the amount that was paid to them.

Question: Can independent contractors be forced to work at a specific place? The company I work for has said that new laws have passed for independent contractors and that's why they can force us to go to the office to work and tell us when our work day starts and ends. Does this law actually exist? Is there anything that exists that says independent contractors can be forced to work at a specific place and time when such things were not covered in the contract I signed?

Answer: If they are telling you how, when, and where to do your work then you are not an IC, you are and employee. Please see below at what the IRS indicates companies should use to determine if a person is an employee or IC Common Law Rules Facts that provide evidence of the degree of control and independence fall into three categories: 1. Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job? 2. Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.) 3. Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business? Businesses must weigh all these factors when determining whether a worker is an employee or independent contractor. Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor. There is no “magic” or set number of factors that “makes” the worker an employee or an independent contractor, and no one factor stands alone in making this determination. Also, factors which are relevant in one situation may not be relevant in another. The keys are to look at the entire relationship, consider the degree or extent of the right to direct and control, and finally, to document each of the factors used in coming up with the determination.

Question: Can we hire only independent Contractors from our state? What forms do we need our independent contractors to fill out for taxes? We are located in Nevada. It is for my home-based travel agency.

Answer: W-9 for their Social Security Number. If you hire people as independent contractors, you have to treat them as independent contractors. Just calling them independent contractors, even if the worker agrees, is baloney. Using an independent contractor means you can dictate what the end product looks like but not the means to get there. If you treat them like employees--pay a low amount that looks like wages by the hour, provide tools and a place to work, demand their presence at your location, dictate work hours--when one of them gets fired or injured on the job they are going to file an unemployment or workers compensation claim and you are going to have a big tax bill that you thought you could avoid. If you try to cheat the system, eventually it is going to come back and bite you.

Question: How can I keep independent contractors from stealing my customers in California? I have a small IT business in California and I need to hire independent contractors from time to time. Recently, one of the people I hired for a job went to my customer and told them he would do the same work I do for them, except he would do it cheaper. I've heard that non-compete agreements are illegal in California, so how am I supposed to protect my business?

Answer: Charge less then the independent contractors.

Question: Why were independent contractors employed as interrogators of detainees? Has it been done in the past? Why were independent contractors employed as interrogators of detainees? Has it been done in the past? Is this usual practice? Is this the future of USA international & domestic law enforcement?

Answer: Yes, I know for a fact it was done during the Viet Nam war because a lot of the interrogations were done by an open cargo door at 1000 feet and, if someone refused to answer the questions.... the 'contractors' would just kick him out and ask the next prisoner... sooner or later... someone started talking. Of course, I didn't 'see' anything because I was too busy flying the bus

Question: What tax forms do I need independent contractors to fill out for my small business? I am starting an online tutoring business and hiring my tutors as independent contractors. Do I need them to fill out an IRS forms with me when I hire them? What do I have to do accounting-wise for my employees?

Answer: 1099 R

Question: Can my independent contractors create bills for which my company has to pay? I have a real estate company with my agents as independent contractors and we recieved a collection notice from an advertiser for an over due bill. The bill is in my company's name but the agent was the one that purchased the advertising. So my question is can the advertisement company stick me with the bill that my independent agent ordered? Thanks!

Answer: Depends on the contract with that person. If the independent contractor is just that, on their own except for information needed to conduct their business which they profit from, AND are not in any way on your payroll, nor get any benefits from you in any capacity as an employee, then that person misrepresented themselves to the advertising company. That makes them liable for the debt. It also puts you in the position to tell them that their privilege to work with you has been terminated. For the complete story, however, you need to go see an attorney. There may be a point in all of this that does make you liable. Only an attorney would really know, and be able to correctly advise you.

Question: What are the differences between employees and independent contractors? What are the differences between employees and independent contractors? Is it possible for an employer to reclassify all of his/her employees as independent contractors? Why or why not?

Answer: Independent contractors bring their own tools, determine their own work schedule, generally work without supervision and are paid in lump sums at times specified by the contract. An employer must supply tools for employees, dictates the work schedule and pays a wage based upon hours worked.

Question: How can I get group health insurance for a large group of independent contractors? I'm involved with a company that has over 50,000 independent contractors. What are my options to seek out a group health insurance plan at great savings for the independent contractors? Jody

Answer: Need to check a lot first

Question: What do I need to start a small company and pay independent contractors to work events for me? I'm being hired by a company and they are paying me to hire others to work an event. They will pay me and I will need to pay my people. I believe I need to have my independent contractors sign w-9 forms. But what do I do after that? I don't want to have to pay taxes on money that goes to someone else. What forms do I need to submit to the IRS, etc. Thank you!

Answer: you can ask the IRS that

Question: How do I send 1099s without an EIN?I am an independent contractor and 'hire' sub contractors to complete work. I am an independent contractor who hires sub contractors to do transcription work. Thus I do not have an EIN. How do I send out 1099's without that? I bought the Home and Business edition of Turbotax so I could print out 1099's and have run into this road block. Thank you!

Answer: Use your business' tax id number sometimes referred to as a TIN or just use your SS#

Question: Can a temp agency hire independent contractors rather than employees &remain exempt from having tobe licensed? New York State law says that a temp agency is exempt from having to be licensed as an employment agency. However, can a temp agency hire independent contractors and still remain exempt from having to be licensed?

Answer: The question is self explanatory. Being a temporary agency, they cannot hire independent contractors (who would not give temporary service)!!!

Question: Do I need a small business license to open a Mobile Spa if all the technicians are independent contractors? A couple of friends and I want to open a mobile spa business. We are all currently independent contractors and all licensed in our respective fields. Do we need to have a business license if we are all planning on staying independent contractors? Do we need any other licenses or permits?

Answer: Business licenses are regulated by local municipalities. So it is best to check with your local government. For very good and free advice especially since you are venturing into this with friends is to seek the help of SCORE (Service Corps Of Retired Executives). They have chapters all over the country and also offer online help. Check them out. They have been helping businesses get stared since the 60's. http://www.score.org/index.html

Question: What type of Insurance do I need if I have a business that has independent contractors? I have a business that is a service bureau (printed circuit board design) and I have independent contractors. I need to get insurance so that when they go to a customer site they are covered and don't sue the customer in case of an accident or something. What type of insurance do I need, where can I get it, and how much will it cost? Thanks for your help in advance!

Answer: If you need that kind of insurance, you don't have independent contractors, you have employees and need workers compensation insurance. Contact your regular insurance agent and tell him the whole story.

Question: Can foreign student who have come to the US to go to college be independent contractors? I want to hire foreign students as independent contractors to do rather simple tasks. Is it possible? They don't have a work permit but on the other hand they are not employees since they are independent contractors. Thanks!

Answer: no, work is work, and they aren't allow to work off campus without permission. they could jeopardize their status.

Question: Is there a program that help independent contractors get started with a business? I am a cosmetoligist and I will be renting a booth in a new salon. I am hoping there is a program for independent contractors needing help with getting started, Materials or help with a loan? My credit isn't good but its fair. Please email me with ideas. No mean comments please, for this is very important to me!!!

Answer: go to your local chamber of commerce. they can connect you to your area small business association. they will help you get started or at least send you in the right direction. good luck.

Question: If I own an internet company and we close down do I have to pay out independent contractors? I own an online marketing company and we are closing down. Do i have to pay out the independent contractors who have made money before it closed down? Or could the company close down and legally not have paid them?

Answer: Although I am an attorney licensed to practice law in California, what follows is not to be construed as legal advice, nor am I in any manner undertaking to represent you in a legal capacity. (Ok...now that the boring disclaimer is out of the way...) The answer to your question depends upon a number of factors including (but not limited to these 3); 1) the jurisdiction in which your business operates; 2) the form of your business entity; 3) the contractual relationship that was formed between the company and the independent contractor. In California, for example, if you formed and operated your business as a limited liability entity (Corporation, LLC or Limited Partnership), you may be able to dissolve the business by filing a certificate of election to wind up and dissolve and a certificate of dissolution with the Secretary of State. You would publish in a newspaper of general circulation in the county where your business is located a notice of dissolution. This step gives vendors one year to file suit to try to collect, as opposed to the four years statute of limitations on written contracts. If you did not organize as a limited liability entity, it is highly likely that you can be sued personally for the debt. If your contract verbiage provides that the parties to the contract are Company A, a California Corporation, and B Subcontractor, then your contract restricts recovery to the corporation, and the debt would not be recoverable from you personally, unless the prospective plaintiff is successful in piercing the corporate veil. This is generally accomplished by pleading that the business owner and the corporation or llc are a sham and under the alter ego theory if the court decides that equity favors the Plaintiff, you can be held personally responsible for the debt.

Question: Are more independent contractors charging less due to the poor economy? My sister was getting bids for some interior house painting. The three small businesses were almost fighting for the job (Like price wars). The same thing for her tile work. Many contractors in our area are having to lay off employees and doing the work themselves with family members at reduced bids just to stay afloat. Is it better for an independent contractor to try and get 5 jobs by bidding less thus working harder/more hours? Or 3 jobs at a higher rate thus possibly missing out or making less income by having less work?

Answer: i am a sub contractor. i base the price of a job by how long it will take and my helpers labor so i cant cut my price. my prices are already lower than most..materials keep going up every day i mostly let my clients buy there own materials . that way they know that they arent being over charged.so no i wouldnt charge less.a lot of people dont know but they can be there own contractor and sub out the work and save a lot of money

Question: Do independent contractors fill out a form b4 employment? I'm starting a new business and was wondering if my independent contractors have to fill out a form before they start working, or do I just issue a 1099 at the end of the year? How do i know the SSN isn't a fake besides asking for a copy?

Answer: You should have them fill out a W-9, "Request for taxpayer identification number". That way you will have it at the end of the year for the 1099.