Independent Contractors

jthacke3

jthacke3

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Had a job seeker stop by today expressing his desire to not be an employee, but rather an independent contractor with his compensation payable to an LLC. Doesn't seem interested in having benefits--health, pto, holiday pay, etc.

What are the potential pitfalls of such an arrangement? I'm sure he has his reasons, but why wouldn't I want to do this?

TIA
 
bigj1972

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Well as an IC, if he works inside your facility, you are still liable for OSHA and physical injury. You may still be required for witholding tax liability.
It maybe the new side hustle, but I would keep employees, employees and separate entities outside.

You know eventually there will be some disagreement. Why muddy the waters with a squatter. If he wants to be IC, let him do it on his own dime.
 
zero_zero

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Not sure how this works in the states, but I used to have a few employees hired as subcontractors up in Canada, it had benefits for both sides... namely we didn't have to file the monthly taxes and could terminate the contract w/o having to pay severance, on the other hand they benefitted from a higher paycheck and had a chance to weasel around the tax system with more freedom.
 
CatamountRob

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At one time I did work for my Uncle from 70 miles away and we looked in to a change of status.
He supplied the work, all the tools and materials and I did most of the porcelain work for the lab. I supplied the space and I was an employee.
An independent contractor would generally supply the equipment and materials, the space and would be less integral to the business.
The definition isn’t exactly set in stone and is open to a certain amount of interpretation but it’s something you’d want to discuss with a tax advisor.
 
sidesh0wb0b

sidesh0wb0b

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Had a job seeker stop by today expressing his desire to not be an employee, but rather an independent contractor with his compensation payable to an LLC. Doesn't seem interested in having benefits--health, pto, holiday pay, etc.

What are the potential pitfalls of such an arrangement? I'm sure he has his reasons, but why wouldn't I want to do this?

TIA
speak with your tax accountant for advise about this to start. it may or may not be beneficial to your scenario
 
Andrew Priddy

Andrew Priddy

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Well as an IC, if he works inside your facility, you are still liable for OSHA and physical injury. You may still be required for witholding tax liability.
It maybe the new side hustle, but I would keep employees, employees and separate entities outside.

You know eventually there will be some disagreement. Why muddy the waters with a squatter. If he wants to be IC, let him do it on his own dime.
is the IC working out of his home? if so, this is a viable option if- IF this individual has a licensed company, pays taxes thru its company and AND most importantly has a Bond that covers them on your property then ok. a half million dollar bond is about 600$ a year. if he is serious and smart, he will already have one.
Had a job seeker stop by today expressing his desire to not be an employee, but rather an independent contractor with his compensation payable to an LLC. Doesn't seem interested in having benefits--health, pto, holiday pay, etc.

What are the potential pitfalls of such an arrangement? I'm sure he has his reasons, but why wouldn't I want to do this?

TIA
this makes perfect sense if he is a veteran...
he gets taken care of (as he should) and then has to pay for a bunch of worthless bs. also, if he is disabled, you may have state requirements where this relationship could be beneficial in meeting those requirements.
you will avoid paying the "employee" side of maintaining one, he gets a better salary and a major tax writeoff.

its really not much different than having someone do your design work. discounting without exploring further may be a mistake.
 
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