Hi Handyman lets break down the independent contractor structure. It’s pretty clear when you dive into it.
How to make sure you classify your independent contractor employees correctly is based on a few different easy things. If you don’t follow these practices you will open yourself up to penalties and fines by the IRS not to mention be liable for worker’s compensation and other benefits that you are trying to avoid.
- They make their own hours. I use an online scheduling program that allows them to choose when they are available for work.
- They decide how they do the job. You are hiring qualified professionals that should know how to do the job on their own. Or at least if you are asked you say they work on their own.
- They sign an independent contractor agreement agreeing to the terms and rate of pay you set also acknowledging that they are an independent business responsible for their own insurance releasing you as an employer. ( agreement can be found in your UHA member area documents.)
- Having them obtain a business license also helps but not required if they belong to an association or union to show freelance independent of you. I have all of my contractors join the UHA and become verified. Another way of showing they are their own business getting independently screened. It also provides a link with their skills and photo I can send to clients prior to their arrival.
- I also make it clear to them that if they aren’t going to cover them selves with worker’s compensation then if they get hurt I am not liable for them per the agreement. You can choose to force them to have their own liability Insurance. When I have done that in the past I just pay them a little more to cover it but my name isn’t attached.
- Have them fill out a W9 (found in your UHA member area)
- When you file your taxes claim that expense properly to get the benefit of the full write off for all payments made. (consult your accountant for classification)
- Owns his own tools.
- Has the freedom to do other same type jobs on his own.
- Make sure you have complete and upfront communication with them. They need to be clear about everything including their own responsibilities for taxes and they will be given a 1099 without any withholdings by you.
Follow these guidelines and you shouldn’t have any issues.
Happy Home Repairs