Hiring an Independent Contractor

                An independent contractor is also known as a freelancer, consultant, or contractor. A small business owner who hires a contractor is not required to withhold income taxes, pay social security and Medicare taxes, or unemployment tax on payments for the work performed. Additionally, a business owner may be exempt under Florida law from workman’s compensation coverage, based on some of its work being performed by contractors and not employees.

A Written Agreement

               There is no requirement to have a written agreement with a contractor, but it is ideal to have one. The agreement makes clear the terms of the working relationship to prevent misunderstandings and can be used to demonstrate to the Internal Revenue Service (IRS) that the worker is an independent contractor and not an employee.

The agreement should confirm in writing:

• the scope of work to be performed;
• how and when the contractor will receive payment for work;
• the worker’s status as a independent contractor;
• payroll taxes will not be deducted and a 1099 will be issued to the IRS;
• health benefits and coverage for unemployment and worker’s compensation insurance will not be provided by the small business for the benefit of the contractor;
• contractor’s ability to work for others;
• how and when the relationship between the small business and independent contractor will be terminated; and
• liability of the small business owner and independent contract for damage and/or injuries.

Do not Misclassify an Employee as an Independent Contractor

                An independent contractor-client relationship most of the time benefits both parties. When the classification only benefits the business and the contractor is a misclassified employee, there is the potential for a wage and hour employment lawsuit from the employee and penalties from the IRS. If the misclassification is found to be intentional, then criminal charges can be imposed.

Hiring a Professional to Help     

                When hiring contractors, a business attorney can ensure the worker is not being misclassified as a contractor and can draft an agreement that prevents headaches from the State of Florida and the IRS, and disagreements with the contractor.

Disclaimer: The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction or the jurisdiction applicable to your issue/matter. No information contained in this post should be construed as legal advice from Roberts Law, PLLC or the individual author, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this Post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.