Avoid Fines:

How To Classify and Set Up Subcontractors the Right Way

Contractor Accounting - Profit Wise Accounting
How To Classify and Set Up Subcontractors the Right WayHow To Classify and Set Up Subcontractors the Right Way

Avoid Fines:  How To Classify and Set Up Subcontractors the Right Way.
Practical steps to protect your business, pay people correctly, and stay compliant

1. Before You Hire: Is This Really a Subcontractor?

The very first step is deciding whether the person you want to hire should be treated as an employee or an independent contractor (subcontractor). Getting this wrong can be expensive.

You are more likely dealing with a subcontractor if:
– They run their own business and offer services to multiple clients.
– They control how, when, and where the work is done.
– They use their own tools, software, and equipment.
– They can hire their own helpers without your approval.
– You are paying them by project, invoice, or retainer.

You may be dealing with an employee if:
– You set their work hours and schedule.
– You tightly control the process, not just the end result.
– They work only for you, or primarily for you.
– You provide most or all of the tools, equipment, and training.
– You pay them hourly or salary through payroll and withhold taxes.

 

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