Belk On Business

Rules to Determine if Employee or Contractor  - Business owners attempt to avoid the additional work of paying someone as an employee as well as making FICA contributions and unemployment tax by classifying workers as contractors instead of employees.   - The penalty for misclassifying a worker as a contractor instead of employee can be up to 35% of the payments made to the wrongly classified worker plus interest.   - Independent contractors paid over $600 must be issued a 1099-NEC by January 31 each year.  A business should be collecting a W-9 from the contractor before paying the contractor so to have the contractor’s name, social security number or employer identification number and address.  A 1099-NEC should be issued to all individuals, partnerships or LLCs taxed as a disregarded entity or partnership.  - To determine how an individual should be classified, the IRS has a form to assist in determination.  IRS Form SS-8 provides factors the IRS uses to determine how an i