Be Careful with Subcontractors

IRS has again made a point to audit businesses who pay employees as subcontractors.  There are a number of tests that must be met to clearly define a person performing services for you as an independent contractor.  Three simple tests to consider:  1. Did the person invoice me for their time? 2. Do they perform these services for other people? 3. Do they have their own business?.  If you cant answer yes to all three they may be an employee.  For more information regarding this matter take a look at this tutorial from IRS.  http://www.irs.gov/pub/irs-regs/subcontractorstext.prn.pdf

 

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