Tax Tip: Hiring for Your Business
Posted on February 20th, 2017 by Guest Blogger
If you have others working for you in your business who are not your children, they can either be considered an employee or an independent contractor.
If you hire someone as an ‘Employee’, you are thereby considered an ‘Employer’ and you will incur expenses beyond the employee’s wages, such as employment taxes, unemployment insurance and workers compensation insurance.
Tax Tip: Outside Contractors
If you hire someone as an 'Independent Contractor,' however, you are not responsible for those extra taxes, but you give up the control you would otherwise have over someone considered as an employee.
Make sure you have all independent contractors fill out a federal form W-9 prior to making any payments to them so you have the necessary information for year-end reporting requirements.
If your parents are able to work for you in your business and they can replace a non-family employee, you can pay your parents those wages and keep that money in the family. Unlike paying your children under age 18, you do have to pay the FICA and Medicare taxes on wages to your parents, but you don't have to pay Federal or State unemployment taxes like you would any other non-family employee.
Consult your tax professional to see if this fits your circumstances. This is not to be taken as tax advice.
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