Businesses that pay you $600 or more for services must send you an independent contractor tax form – Form 1099, by January 31, the deadline requirement by IRS. You may receive a 1099 Misc form for receiving prizes, awards, or when making $5,000 in direct sales for resale to a buyer.

We specialize in serving companies in the real estate, construction, manufacturing, oil & gas, and professional services industries. If you have been misclassifying employees as contractors, the penalties can be steep. Our office can discuss your workers with you, letting you know how to proceed in order to legitimately treat them as independent contractors. Employers generally provide benefits to employees, which can be expensive. Moreover, employers must pay a share of Medicare, Social Security, and state unemployment taxes.

Reviewing Revenue Recognition for Construction Companies

A contractor will be earning an agreed upon amount from the company, but will also have expenses such as supplies and materials; hence the ability to profit or lose money from the agreement. Independent Contractor Tax Advisors is a licensed CPA firm that provides accounting services and tax advice for contractors, consultants and other self-employed clients across the U.S. Our clients love us because we simplify their lives and put more money in their pockets. Failure to meet these challenges correctly can lead to audits by the IRS, your state’s employment commission, and insurance companies.

These forms can be found online, or can be obtained from that CPA you should have hired. One such firm—Make My Day CPA —has stores where you can use workstations and print out the forms, as well as 1099s, when it is time to file them with the IRS. Calculate your state unemployment tax act amount according to your state’s rules and regulations. The locales with highest rates are District of Columbia (5.9%), Alaska (6.6%) and New Mexico (6.7%). This brochure contains general information for taxpayers and should not be relied upon as the only source of authority. Taxpayers should seek professional tax advice for more information.

Do LLC Members Owe Self-Employment Tax?

At the end of the year, the total accountant for independent contractorable income must be proven with the W-2 form filed before the annual deadline in April. An independent contractor is a natural person, business, or corporation that provides goods or services to another entity under terms specified in a contract or within a verbal agreement. You do not generally have to withhold or pay any taxes on payments to independent contractors. Those persons or companies are responsible for reporting any income from your work to tax authorities, and for paying all applicable taxes. When you sign on to perform an accounting or bookkeeping job, it’s important that you establish a clear working relationship with the firm that hired you.

If in doubt and unable to decide, you may file form SS-8 with the IRS. They will make the determination of whether an individual should be classified as an employee or an independent contractor. If you have any additional questions or concerns, please contact your CST consultant.

Hiding Places for Unprofitability in Your Business

Coinciding with this were several discussions in many of my QuickBooks ProAdvisor® peer groups regarding best practices for managing independent contractors. It became apparent to me that it was time to make the switch from independent contractors to employees. You will want to open a bank account specifically as an independent contractor business. This will help you separate your financial status from your businesses.

Employer provides a place to perform the work and the tools/equipment to perform the job. There are three main elements the IRS lists when making this determination; behavioral control, financial control, and the nature of the relationship. They could hire assistants to help them perform agreed-upon services. They could accept or reject work requests they received through the company’s platform. The U.S. Department of Labor recently published a new wage and hour opinion letter, spelling out its position with respect to a specific virtual marketplace company .