Employee or contractor?
Government figures estimate 25–30% of all employees are misclassified as independent contractors. If the misclassification is discovered, clients will owe up to three years in back wages for any overtime, as well as penalties for insurance and benefits denied under the Affordable Care Act.
What is the difference between employees and contractors?
While the IRS, the FLSA, and common law have all helped define the differences between an employee and an independent contractor, the difference between the two is not totally cut and dry.
The IRS generally assumes an employee relationship, but the line can sometimes be ambiguous. For detailed information on the difference between independent contractors and employees, consult the IRS guidelines.
Employees must fill out the following forms which need to be kept in employer records:
1. W-4 form to indicate how much income tax they want withheld from their paychecks
2. I-9 form to prove they’re allowed to work in the US—employers also need to check their passport or other ID on or before the first day of work
Once onboarded, my payroll partner, Gusto can take care of sending a New Hire Report to the state. The state uses the details to keep track of people who owe certain government debts, like child support.
At the years end your company must report all compensation paid to an employee during the tax year using a Form W-2.
Don't forget about the state and federal unemployment insurance as well as Workers' Comp Insurance.
As your bookkeeper, should you decide to have I'm the Bookkeeper handle your payroll for you as a stand alone service, you should feel confident to know that I have partnered with Gusto Payroll.
US News has rated Gusto a 4.3 in their Best Payroll Software of 2022 list and report that "more than 100,000 businesses across the country use Gusto to run payroll and administer benefits".
Yes, with Gusto we can offer your employees benefits, with the current state of the country and difficulty retaining good employees - this is a valuable resource!
If you would rather administer your own payroll and are currently shopping or considering a change, I recommend Gusto. Check it out and sign up using my link if you want to manage your own payroll account and you'll automatically be added to my client list.
Even if you decide not to retain my services for your payroll, I still recommend Gusto, and if you sign up using THIS DIFFERENT LINK and run your first paid payroll, you’ll receive a $100 Visa gift card!