When you’ve got independent contractors doing work for your business, it’s important not to treat them like employees.
If your contractors are reclassified by the government as employees, you’ll likely pay a fortune in back taxes, penalties, and to your accountants and attorneys trying to clean up the mess.
Here are three things you can do to limit your risks when it comes to contractors.
1. Give up control. One of the fundamental differences between a contractor and an employee is that the latter has a boss managing how things are done. On the other hand, if your work is truly independent, they control getting the work done but have to deliver to your specifications. No micromanaging.
2. Get rid of employment language. Don’t use terms like “employment,” “hire,” “fire,” etc. when referring to your relationship with the contractor. Replace with phrases like “contract with,” “terminate the agreement,” etc.
3. Use a written independent contractor agreement. An experienced business attorney can prepare a custom template agreement you can use with your contractors that’s designed in part to make it clear the workers are not your employees.
If you need legal help with your independent contractor agreements or advice on how to deal with your contractors, it’s time to book a phone consultation with Business Attorney Mike Young.