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EMPLOYEE OR INDEPENDENT
CONTRACTOR?
By Chuck Wells
Small contractors (carpenters,
electricians, plumbers, etc.) like to hire additional people to
help them with their jobs but don’t want them classified as
employees because they would then have to pay for Social
Security and Workers Compensation insurance. They call these
additional helpers “independent contractors” and think they can
get away with it. That is fine until they are audited by I.R.S.
or a state agency. The government will probably re-classify
these helpers as employees and charge all the back taxes,
worker’s compensation insurance, plus penalties.
Want to make a better case for
yourself if you are audited? Here are some hints:
- Get Certificates of
Insurance from anyone who works for you showing they have
their own insurance.
- Get a copy of their Doing
Business As papers or Articles of Incorporation
- Get one of their business
cards, copy of their Yellow Page ad, or other advertisements
showing they work for other people.
- Document what special skills
they have which your business does not have.
- Make sure they provide their
own equipment, supplies, and base
of operation.
- Spell out clearly in writing
that they will not file unemployment or worker’s compensation
claims.
- File 1099’s for all payments
you make to independent contractors.
- Check with your accountant
to see what other documentation is recommended.
Just saying that someone is an
independent contractor doesn’t cut it. I have seen many
situations where someone is hurt on the job and goes back after
the contractor saying they were an employee and they usually
win. If your sub-contractors can’t provide this documentation
for you, don’t hire them. It’s not worth getting that job.
THE PAJAMA LAWSUIT
Erminia Kirshy sued Lady Ester Lingerie Corp. after sustaining
burns to more than half her body when her pajamas started on
fire. Kirshy dropped a lit cigarette on herself which started
the fire but she thought the lingerie manufacturer should be
liable for her stupidity. Kirshy stated that the weight of the
fabric in her pajamas was lighter than what was in the
manufacturer’s catalog. No mention of the dropped cigarette. The
jury awarded Kirshy $2.2 million which was later reduced to
$1.75 million.
INSURANCE FROM GOD?
Want cheap car insurance? You don’t need to call those 800
numbers who promise you the world and deliver nothing. Just get
a policy from God.
An Oklahoma City salesman was selling car insurance under “God’s
Insurance Policy” for only $285 per year. It was issued by the
Father, Son, and Holy Ghost. Really. The salesman said since
most accidents are caused by fear, this policy would protect its
purchasers. Filing a claim could be deadly though.
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