SOURCE: Payroll On A Budget

Payroll On A Budget

July 17, 2013 09:00 ET

Employee vs. Independent Contractor: Real World Example; Another Blog by Author/CEO - Charles Read

DALLAS, TX--(Marketwired - July 17, 2013) - How do you determine if someone is a contractor or an employee?

Charles Read asked a perspective client, "Why are your people contractors?" and the answer was that it has always been that way and that he thought it was easier.

The following questions were asked and answered to help determine if someone would be considered an employee or contractor: Who determines work flow? Who decides which person does each task? Are there set rules to follow? Are there expenses that are not reimbursed by the company? Do the contractors have other clients? Do the contractors have any risks of loss? And many more questions and issues were asked that showed his contractors were actually treated as employees.

At some point, an auditor comes in and notices biweekly checks going to the same people. Then the state employment agency would want unemployment taxes. The next issue would be the IRS that would be looking for FICA taxes with penalties and interest. The federal government would also get involved.

The real cost of having employees vs. contractors involves a lot of questions and having an informed advisor(s) will make all of the difference in deciding what kind of financial impact will hit your bottom line.

To view a video and read additional information about being an employee vs. contractor, go to, blog posting:

Payroll On A Budget is the leading online payroll processing services company with a focus on offices of 10 people or less. ( One of only a few payroll firms with CPAs on staff to assist clients, the company was designed to save both time and money by providing all payroll related services -- including tax filings and more.

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