Toe

How to Toe the Line When Hiring Independent Contractors and Reap Big Dividends

All you’re required to do is inform the IRS if you paid this worker more than $600 in one year.

The phrase Toe the Line is an Americanism first recorded in the early nineteenth century. The main meaning of this phrase is ‘to conform strictly to a rule, command, etc… For example, “Anyone who doesn’t toe the line can expect to meet the mayor in court, where, as it turns out, he has never lost a suit.” (U.S. News & World Report, 1996).

And…

An Independent Contractor is a person hired to work for others without having the legal status of an employee.

Hiring someone who qualifies as an Independent Contractor can provide an employer with some very BIG dividends…

Dividend #1: You don’t have to pay the employers share of the workers Social Security and Medicare taxes.

Dividend #2: You don’t have to withhold income taxes (federal or state) on his/her earnings.

Dividend #3: Not only do you reduce your bookkeeping and financial obligations, you’re not bound by many of the federal and state laws that normally govern the employer – employee relationship.

Dividend #4: You don’t have to provide office or other work space for the worker.

Dividend #5: You don’t have to provide fringe benefits (vacation, personal or sick time).

Dividend #6: You don’t have to provide health insurance or retirement benefits.

Dividend #7: If you become unhappy with the person’s work, you can fire him/her without going through the trauma often associated with firing an employee. Plus you don’t get stuck paying unemployment benefits.

All you’re required to do is inform the IRS if you paid this worker more than $600 in one year.

You’re responsible for filing a Form 1099-MISC at the end of the year …

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