Misclassifying Employees as Independent Contractors ... One of the Most Expensive Mistakes of Them All! Part 1

Written by Elena Fawkner

Continued from page 1


=> Cost

As mentioned above,repparttar main advantage of independent contractors versus employees is cost. You can getrepparttar 117962 same or better service from independent contractors for a lower hourly rate than you can from employees because you don't have to incur allrepparttar 117963 add-on expenses that go along with hiring employees.

=> Equipment and Materials

In addition, you don't have to provide office space or materials and equipment to independent contractors. As independent contractors (who may also go byrepparttar 117964 terms "freelancers", "consultants", "self-employed", "business owners" etc.) are self-employed business people, they have their own "tools ofrepparttar 117965 trade". If they're website designers, they have their own office space, computer and printing equipment. If they're gardeners, they have their own lawn mower, whipper-snipper, wheelbarrow and pruning shears.

=> Legal Liability

At law, an employer is vicariously liable forrepparttar 117966 torts of his or her employees. This means that if you hire an employee gardener who accidentally runs over your customer's pet cat inrepparttar 117967 driveway of her home whenrepparttar 117968 customer had made it clear that your employees are always to park inrepparttar 117969 street, in addition to suing your employee for negligence, she can also sue you,repparttar 117970 employer, as you are vicariously responsible forrepparttar 117971 acts of your employees. (And, byrepparttar 117972 way, this applies whenever your employee is acting withinrepparttar 117973 scope of employment, whether under your express instruction or not. If your employee has a car accident when traveling between jobs and his negligence at least partially causedrepparttar 117974 accident, you're responsible torepparttar 117975 same extent asrepparttar 117976 employee.)

This is generally notrepparttar 117977 case with an independent contractor unlessrepparttar 117978 independent contractor has been engaged to perform an inherently dangerous activity (such as blasting) or you have attempted to delegate to your independent contractor a non-delegable duty (such as keeping a rental property you own in good repair forrepparttar 117979 benefit ofrepparttar 117980 tenant).

In addition to minimizing legal liability for torts, hiring independent contractors also minimizes your liability for other types of lawsuits such as wrongful termination or job discrimination.


There are two main disadvantages to hiring independent contractors versus employees.

=> Misclassification

Far and awayrepparttar 117981 most serious disadvantage is if you misclassify employees as independent contractors. Merely labeling a worker as an independent contractor is not enough. They must actually be an independent contractor.

If you do misclassify an employee as an independent contractor, you must payrepparttar 117982 IRS all back-taxes owed, plus interest, plus penalty (12% - 35% ofrepparttar 117983 total tax bill).

Also, you expose yourself to an increased risk of state audits when your terminated independent contractor files for unemployment benefits. Never mind that you and your independent contractor intended that there be no employer/employee relationship, many'srepparttar 117984 disgruntled independent contractor who unilaterally decides to recategorizerepparttar 117985 relationship as one of employer/employee whenrepparttar 117986 spectre of unemployment benefits raises its pretty head. In such situations, you'd better be able to protect yourself by proving thatrepparttar 117987 arrangement was for an independent contractor and not an employee.

=> Legal Liability

Unlike an employee who is limited to workers' compensation benefits, an independent contractor can sue you for negligence if they're injured onrepparttar 117988 job. That's what liability insurance is for though.

Elena Fawkner is editor of A Home-Based Business Online ... practical home business ideas for the work-from-home entrepreneur. http://www.ahbbo.com

Am I Normal?

Written by Jackie Ulmer

Continued from page 1

Normal SHOULD be waking up when your body is rested, not whenrepparttar alarm clock rings. Normal SHOULD be taking a vacation when it fits your family's schedule, not when your seniority allows. It SHOULD be having a parent at home when a child comes home from school.

To me, normal ISN'T sitting in rush hour traffic twice a day. It ISN'T working fifty weeks in exchange for two weeks off a year, or five days on for two days off a week. It ISN'T wearing my name and picture attached to my clothing.

Everyone must determine their own definition of what "normal" is and isn't. For those of us who have decided to step outsiderepparttar 117961 box, take control of our lives and build our own business, normal is anything BUT normal!

Life is full of risks, it's true. But, everything great that has EVER happened has done so with some degree of risk. I don't want to get torepparttar 117962 end and WISH I had taken just a few risks.

I'm urging you to take some risks with me! Step up torepparttar 117963 plate! Decide what it is you want out of your life and your business and GO FOR IT! FORGET ABOUT NORMAL! Create your own "normal!"

We are atrepparttar 117964 very beginning ofrepparttar 117965 new millennium! The Internet is overflowing with possibilities, as it breaks all growth records ever set by anything, and it is just not NORMAL!

As I lay in bed, building my empire (business) on my laptop, I realize just how much I love my other-than-normal life. I wouldn't trade it for anything! The clock says 10:07 PM. Ahhh, lunch break!

Jackie Ulmer is a veteran Home Based Business Owner, and has coached and trained thousands of representatives both inside and outside of her sales organization. Her free newsletter is available through email at mailto:streetsmartwealth@quicktell.net She can be reached through her web site at http://www.streetsmartwealth.com/

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