Misclassifying Employees as Independent Contractors ... One of the Most Expensive Mistakes of Them All! Part 2

Written by Elena Fawkner

Continued from page 1


OK, so you knowrepparttar difference between an independent contractor and an employee, you knowrepparttar 117951 advantages and disadvantages of hiring independent contractors and you knowrepparttar 117952 dangers of misclassification. How do you protect yourself?

=> Independent Contractor Agreement

First and foremost, arm yourself withrepparttar 117953 IRS' control test factors andrepparttar 117954 tests used byrepparttar 117955 various government agencies in your state. Once you have that information, you can structure your arrangements with your independent contractors accordingly. These arrangements should be reduced to writing, inrepparttar 117956 form of an independent contractor agreement.

An independent contractor agreement should contain a description ofrepparttar 117957 servicesrepparttar 117958 independent contractor is to perform, by when they are to be performed andrepparttar 117959 amountrepparttar 117960 independent contractor is to receive in return for satisfactory service.

This agreement can be very helpful evidence in proving thatrepparttar 117961 worker's status was independent contractor rather than employee. Although such an agreement is insufficient by itself (if you nonetheless treatrepparttar 117962 independent contractor as an employeerepparttar 117963 agreement will be worthless for this purpose), ifrepparttar 117964 factors weighed byrepparttar 117965 IRS underrepparttar 117966 control test are evenly balanced, an independent contractor agreement may well tiprepparttar 117967 scales in your favor.

=> Screening

Before hiring an independent contractor, put him or her through a few hoops first. It's a good idea to prepare some form of questionnaire to extractrepparttar 117968 sort of information you would need to be able to prove in support of your argument thatrepparttar 117969 worker is, in fact, an independent contractor and not an employee. Examples of such information (courtesy ofrepparttar 117970 NOLO website - http://www.nolo.com) include:

1. Whetherrepparttar 117971 worker has formed a legal entity for his or her business. 2. Whetherrepparttar 117972 worker has filed a fictitious business name (also known as a "DBA" or "doing business as"). 3. The worker's business address and telephone numbers. 4. The number of employees employed byrepparttar 117973 business. 5. Whetherrepparttar 117974 worker has any professional or business licenses. 6. References from other business for whomrepparttar 117975 worker has performed services as an independent contractor. 7. Howrepparttar 117976 worker markets his or her business. 8. Whetherrepparttar 117977 worker maintains an office separate from his or her home. 9. A description ofrepparttar 117978 equipment and facilitiesrepparttar 117979 worker owns and will use inrepparttar 117980 project. 10. Whetherrepparttar 117981 worker has business cards and stationery etc.. 11. A listing ofrepparttar 117982 types of insurance coveragerepparttar 117983 worker has for his or her business.

Request documents that evidencerepparttar 117984 responses torepparttar 117985 above questions. For example, get copies of fictitious business name statements, professional and business licenses; references; business cards and stationery and insurance policies.

Atrepparttar 117986 end ofrepparttar 117987 day, whether you hire an employee or an independent contractor is a decision for you and your business. If you feel you can adequately protect yourself against an allegation of misclassification then, by all means, followrepparttar 117988 independent contractor route if that makes most sense to you. But if you don't feel confident in managingrepparttar 117989 relationship to protect yourself from such a charge, for your own peace of mind, you may be well advised to hire an employee even if that is more expensive up-front. After all, if you get it wrong, you'll be paying those additional costs anyway inrepparttar 117990 form of back-taxes (and interest and penalties to boot).

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

Into Every Life a Little Rain Must Fall - Part 2

Written by Elena Fawkner

Continued from page 1

"Dear Rosemary:

Just a quick note to say how much I enjoyed meeting you at last week's trade association mixer. I am particularly interested in your ideas for expanding intorepparttar export market. [Seerepparttar 117950 importance of writing notes onrepparttar 117951 back ofrepparttar 117952 card.] I have some thoughts of my own that may help you. I look forward to catching up with you again soon.


Jack Horner"

=> Maintaining Contact

Then, about two weeks later, call Rosemary and suggest a lunch or breakfast meeting to explore waysrepparttar 117953 two of you could refer each other business.

Invite people you have met to attend social functions such as cocktail parties or other networking events.

Make it a point to make contact with every one of your contacts about every two months or so. This could take any number of forms, you need not always invite people to meet. Sometimes sending someone a clipping of an article of mutual interest or a cartoon that you think they will enjoy is all you will do. Other times, you may want to suggest lunch if you haven't seenrepparttar 117954 person for several months.

=> Working Your Network

Over time, by followingrepparttar 117955 above steps, you will develop a sizeable network and an organized way maintaining contact on a systematic basis will become essential.

Establish a system whereby you perform a set number of network development tasks a day, preferably atrepparttar 117956 same time of day. For example, you could set aside an hour first thing every morning to do your networking tasks. Let's say you have 200 contacts in your network and you want to make contact with each of these contacts at least once every two months. At this rate you will need to contact five people every day (200 contacts divided by 40 working days). All you have to do is make five phone calls between 9:00 am and 10:00 am and you're done. Or, you could make three phone calls, send one note enclosing a copy ofrepparttar 117957 latest article you wrote for an industry publication and meet one person for breakfast or lunch.

Some days you will have both breakfast and lunch plans with someone from your contact list. Don't forget you can also kill two birds with one stone by inviting more than one person to lunch. Bring together people from your network who don't already know each other but who could help each other. Who knows who these people know that you haven't met yet?

You getrepparttar 117958 idea.


As you can hopefully see by now,repparttar 117959 key is to keep in regular contact with your network on a consistent basis. Over time, these contacts will become a rich source of referral business for you and your business will grow in leaps and bounds as a result.

Elena Fawkner is editor of A Home-Based Business Online ... practical home business ideas for the work-from-home entrepreneur. http://www.ahbbo.com/cgi-bin/mmp/sub.cgi?ahbbo=!FLM

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