Updated: Apr 18, 2022
Do you have a independent contractors? Most small business do. You may be surprised.
The first step is knowing if you have an employee or a contractor.
What is the difference between employees and contractors? Employees are paid through payroll and you pay a portion of the taxes. Contractors are paid and then responsible for their own taxes. Be very careful as a business owner to make sure if you have contractors that they are actually contractors! Many business want to avoid paying the employees taxes so they try to justify they are contractors!
Contractors work at their own schedule, supply their own tools, and materials, they are someone that you hire to work for you, but most of the time work for other companies as well. If you supply the computer, office space, they have to work a set hours, and/or they are required to met certain deadlines they are employees!
Contractors include renters, photographers, accountants, legal help, social media managers, virtual assistants and so many more. Most businesses that have someone help them in your business and they aren't employees. If you paid someone over $600 outside of PayPal or credit card you most likely will need to send them a 1099.
Learn more in about independent contractors and 1099s in my free 1099s presentation!