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February 25, 2011

Independent contractor or employee?

  • It matters to the IRS. The issue has come up in the past few years as many companies opted to take on freelancers rather than hire employees.
    • By JOYCE M. ROSENBERG
    AP Business Writer

    NEW YORK — Those independent contractors you hired for your small business last year — they really were independent contractors, right? Or were they employees?

    Many owners may not worry about the distinction, but they should. If the IRS decides that a company should have treated its independent contractors as employees, an owner could be liable for back taxes, interest and penalties. The federal tax code has rules about who can and can't be called an independent contractor.


     
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