Independent Contractors

CONTRACTORS

INDEPENDENT CONTRACTORS

Once you have determined that your workers should be classified as Contractors, [See Workers Classifications], you must collect and maintain proper documentation and file 1099 returns at the end of each tax year.

The general rule is that an individual is an independent contractor if you, the payer, has the right to control ONLY the result of the work and NOT what will be done, or how it will be done. In other words, you cannot pay a worker as an independent contractor if the work they perform can be controlled by you.

STAYING COMPLIANT

Collect W9s for all Contractors.

The IRS requires that you keep a Form W9 on file for all Contractors. The W9 forms determines who is required to get a 1099 at the end of each year, as well as the information needed for those that require a 1099.

Tip: Collect a Form W9 prior to paying anyone. Don't wait until you have already paid them.

Collect Subcontracts and/or Invoices from Contractors.

Copies of Subcontracts or Invoices must be kept on file for all W9 payments, in order to take the payments as a tax deduction.

In the event of an audit, a business owner may have to pay taxes for any non-employee payments that do not have supporting documentation.

File Form 1099s

The Internal Revenue Service requires that 1099's be submitted for all non-employee (contractor) compensation in the amount of $600 or more by January 31st each year, for the previous year.

Review International worker relationships and documentation.

The paying of international workers is a highly regulated process. Subcontracts should be reviewed to ensure that international contractors are not being misclassified.

Furthermore, international payments require international tax reporting. Consider using an online payment platform that handles annual international reporting, such as Paypal, to simplify the paying process - and ensure continued compliance.

Utilize your CFO on the Go services!

By providing required supporting documentation to Bell Solutions, we can help determine who your independent contractor are and ensure you're compliant throughout the year. At the end of each year, you can sign up for Bell Solutions to file your 1099s.

CFO Client Page

Email: info@bellsolutions.biz

Phone/Text: (402) 314-8460