3 Important Steps When Working with Independent Contractors

In the changing employment industry, many small businesses are switching their strategy to hire independent contractors instead of employees. There are a number of benefits to independent contractors, because this form of labor can reduce costs, provide temporary work when it’s needed, and they often require less management since they are experts in their field of work.

If you have hired independent contractors or you are planning to add them to your workforce, then there are few things that you need to keep in mind to ensure that you are properly handling the legal side of things. Working with an experienced small business bookkeeper is a great way to keep these tasks in line. Here are a few things to consider:

Get a Signed Contract in Place

Even though a verbal agreement might seem sufficient at the beginning of the project, many small businesses have encountered situations where they were wishing for a signed contract later on. Make it a priority to have the contract in place from the beginning, so that you can verify that all parties have the same agreement with the work arrangement.

Always Have a Signed W-9

Even though you aren’t hiring the person as an employee, you still need to ensure that the person can legally work in the United States. A W-9 form will help you check their employment eligibility. Additionally, this form makes it easy for you to get the right information that will be needed to turn in the correct tax paperwork at the end of the year.

Send Tax Documents Each Year

Legally, you are required to send each independent contractor a 1099 tax form at the end of each calendar year. This information shows the amount of money they earned during the calendar year, and you need to make sure that it is sent to the independent contractors by January 31st. Many small business owners don’t think about the requirements to send these tax forms, which is why it can be so beneficial to have an experienced bookkeeper available to help with filling out the forms and mailing the appropriate paperwork to each person.

If you are looking for help with managing independent contractors, then we invite you to contact us today! At Easier Bookkeeping, we offer high quality services related to independent contractors such as accounts payable, keeping adequate records, and managing the right information for tax purposes. Contact us to learn more about the ways that you can benefit from these bookkeeping services: (888) 620-0770

 

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