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It’s a fact every business owner and independent contractor should know…
Many state and federal agencies may have you in their cross hairs.
They’re going after businesses that hire “independent contractors” rather than “employees.”
Why?
Because, unlike independent contractors, W-2 employees prepay their taxes. But many independent contractors just don’t cough up the money they owe Uncle Sam.
That’s why the IRS is ticked off. (Actually, they’re furious!)
Here’s how business owners
and independent contractors see the issue.
Business owners like hiring independent contractors which should come as no surprise.
- Business owners don’t pay unemployment taxes or workers’ comp premiums, or provide any employee benefits
- They don’t pay employer payroll taxes
- They don’t have to withhold any taxes from independent contractors’ compensation and pay that money to the IRS
- And that’s just for starters!
Independent contractors like staying independent. And there is good reason for this.
- They like being their own boss
- They can possibly make more money than if they get a salary
- They may pay lower income taxes
- And that’s just for starters!
Here’s how the feds and the states
are trying to take away the punch bowl.
Recently, California’s AB 5 law tried to make it significantly harder for businesses to hire independent contractors.
This law established a new test for determining whether California workers should be classified as employees for purposes of California and thus enjoy several important benefits.
Many other states are also trying to close the tax-payment discrepancy problem outlined above.
This is going to badly hurt businesses and independent contractors.
Where things stand now.
Here’s some good news.
Due to widespread complaints from both independent contractors and businesses, California lawmakers have watered down AB 5.
And because they backtracked, many other states decided not to do move forward with similar changes in their laws
But things are in flux, so…
Whether you’re an employer or an independent contractor, make sure you’re up to date on future changes in the law. These changes can seriously affect your income.
All these important issues will be explained to you in detail when you…