As I just mentioned, I'm an avid tax blogger. In addition to blogging on my own blog, The State and Local Tax "Buzz" and for SalesTaxSupport.com, I'm also a tax contributor to the "AllBusiness Experts" blog on AllBusiness.com. My contributions to the AllBusiness blog cover a variety of tax issues, with a focus on the start-up/SMB/middle-market business. In my recent AllBusiness post, I focus on a topic that the IRS has been highly scrutinizing - worker classification! Here's an excerpt from my recent post, "Independent Contractor or Employee? IRS Guidance for Startups and SMBs."
"Here’s a strategy you see employed by many startups – hiring “independent contractors” to fill temporary or permanent positions. From an economic standpoint, this may seem wise as a company in startup mode may be testing the viability of its product or service, or be in the process of securing funding and may not have the funds to commit to permanent hiring, which would mean not only paying employees’ salaries, but incurring the cost of the employee benefits it offers. And so, it may seem that the safest economic route for many startups and growing SMBs is to simply hire “independent contractors” in lieu of employees.
But this strategy is not without risk. This is because the IRS has been scrutinizing situations where workers are treated as independent contractors by the employing company, but are 'de facto' or 'in fact', employees. Proper 'worker classification', as it is often referred to, is a major focus for the IRS. The primary reason the IRS has upped its focus in this area? Payroll taxes!"
You can read the rest of my post, "Independent Contractor or Employee? IRS Guidance for Startups and SMBs" here -> http://experts.allbusiness.com/independent-contractor-or-employee-guidance-for-start-ups-and-smbs/4975/#.UdrofPkcd8k