Hiring Independent Contractors

Hiring Independent Contractors? Don’t Forget These Important Steps

It is easy to see why business owners frequently hire independent contractors instead of hiring an employee, because a contractor can be beneficial to reduce costs and provide a temporary relationship when the skills are needed. You can pay for specific projects and tasks, instead of having the hassle of bringing on a full time employee.

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If you are hiring independent contractors to help with your business, then there are a few things that you need to keep in mind. These important steps will ensure that you are following the laws and staying compliant with your workforce:

Ask for a Signed W9

You need to be sure that the person can work in the United States, so you should ask for a copy of their W9. This form will verify that they are a US citizen or resident, and you will have the peace of mind to know that you aren’t hiring an illegal. This form will provide the tax information needed that will be used when filling out the 1099 at the end of the year.

Submit a 1099

At the end of the year, you need to send a 1099-MISC form to any contractor who earned more than $600 during the calendar year. This form needs to be provided to the contractor, and you also need to send a copy of the form to the IRS. It is essential that the contractor receives their copy by January 31st, or the next Monday if the 31st happens to be on a weekend. The IRS copy needs to be sent by the last day in February.

Maintain Good Records

Make sure that you keep up with records throughout the year, so that you have information about the work that was performed and how much was paid to each contractor. For example, keep copies of the invoices that were provided, as well as information about the payments that are sent. The easiest way to handle these details is by hiring a small business bookkeeper to help with ongoing accounting and record keeping.

Have a Signed Agreement

Before the contractor starts working on the project, it is best to have a signed contract in place. This contract will keep you protected, and it ensures that all parties are on the same page with the work that will be delivered.

Do you need help with the financial side of running a business? We are here to help! We offer a number of bookkeeping services and other accounting services, and we invite you to contact us anytime to learn more about how your business will benefit: (888) 620-0770

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