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How to Properly Classify Your Workers

 
  Arthur F. Rothberg, Managing Director, CFO Edge, LLC  
   
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  Article Summary  
One of the biggest financial mistakes a company can make is to misclassify its workers. From your perspective, it might not be a big deal whether those who work for you are classified as employees or independent contractors. But the IRS has a very different perspective -- and getting worker classifications wrong can cost your business big money in back taxes and IRS penalties.

Reviewed are the two primary categories of worker classification -- employees and independent contractors -- as well as the three evidence categories used by the IRS to determine proper status. Also addressed are the 20 specific factors used and the process available to obtain an IRS determination on the correct worker’s status.

It’s critical that Los Angeles and Southern California CEOs and CFOs classify their workers correctly. Failure to do so could be costly, as the IRS can assess back taxes and penalties against employers on a per-worker basis for incorrect classifications. An outsourced CFO services provider may be able to provide guidance if you have more questions or are unsure about specific worker classifications.

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