As a small business owner you may hire people as independent contractors or as employees. There are rules that will help you determine how to classify the people you hire. This will affect how much you pay in taxes, whether you need to withhold from your workers paychecks and what tax documents you need to file.
Here are some things every business owner should know about hiring people as independent contractors versus hiring them as employees:
1. The IRS uses three characteristics to determine the relationship between businesses and workers:
" Behavioral Control covers facts that show whether the business has a right to direct or control how the work is done through instructions, training or other means.
" Financial Control covers facts that show whether the business has a right to direct or control the financial and business aspects of the worker's job.
" Type of Relationship factor relates to how the workers and the business owner perceive their relationship.
If you have the right to control or direct not only what is to be done, but also how it is to be done, then your workers are most likely employees.
2. If you can direct or control only the result of the work done -- and not the means and methods of accomplishing the result -- then your workers are probably independent contractors.
3. Employers who misclassify workers as independent contractors can end up with substantial tax bills. Additionally, they can face penalties for failing to pay employment taxes and for failing to file required tax forms.
4. Workers can avoid higher tax bills and lost benefits if they know their proper status.
5. Both employers and workers can ask the IRS to make a determination on whether a specific individual is an independent contractor or an employee by filing a Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding, with the IRS.
In Phoenix, Arizona, veterinary clinics and animal hospitals often enter into contracts with veterinarian assistants to provide their expertise and services. These contracts outline the working relationship between the clinic and the veterinarian assistant, including important provisions for termination, both with or without cause. Let's explore in detail what a common Phoenix, Arizona contract with a veterinarian assistant as an independent contractor entails. Title: Phoenix, Arizona Contract with Veterinarian Assistant as Independent Contractor with Provisions for Termination with or without Cause Introduction: A contract is a legally binding agreement that sets out the terms and conditions of the working arrangement between a veterinary clinic and a veterinarian assistant. In Phoenix, Arizona, these contracts typically establish the rights and responsibilities of both parties, including provisions relating to termination, whether for cause or without cause. 1. Scope of Services: This section of the contract outlines the specific duties and responsibilities of the veterinarian assistant. It details the services they will provide, such as clinical support, animal handling, record-keeping, and any additional tasks agreed upon mutually with the veterinary clinic. 2. Independent Contractor Status: To emphasize the working relationship, the contract defines the veterinarian assistant as an independent contractor, rather than an employee. This section confirms that the veterinarian assistant is responsible for their own taxes, insurance, and other obligations typically associated with independent contractors. 3. Compensation and Payment Terms: The contract specifies the compensation structure for the veterinarian assistant's services. It includes payment details, such as the base rate or hourly rate, and any additional compensation for certain procedures or shifts. Payment schedules, such as monthly or bi-weekly, are also outlined in this section. 4. Termination with Cause: This provision details circumstances under which either party can terminate the contract for cause. It typically includes reasons such as breach of contract, non-performance, unethical behavior, or violation of clinic policies. The contract may provide specific notice periods to rectify any issues before termination. 5. Termination without Cause: In this section, the contract outlines the conditions for termination without cause, allowing either party to end the agreement without providing specific, justifiable reasons. It often includes a notice period to ensure both parties have ample time to settle affairs and find suitable alternatives. Possible Additional Contract Types: A. Full-Time Contract: This type of contract encompasses a veterinarian assistant's full-time engagement with the veterinary clinic, typically involving a set number of hours per week and additional benefits, such as healthcare coverage and paid time off. B. Part-Time Contract: Designed for veterinarian assistants who work fewer hours or have other commitments, this contract specifies a reduced number of hours, often with fewer benefits compared to a full-time contract. C. Per Diem Contract: Also known as a day-to-day contract, a per diem agreement allows veterinarian assistants to work on an as-needed basis, providing flexibility to both parties. Compensation is generally based on a predetermined daily rate. Conclusion: When entering into a contract with a veterinarian assistant in Phoenix, Arizona, it is crucial to establish a comprehensive agreement that protects the rights and interests of both the veterinary clinic and the assistant. Provisions for termination, with or without cause, serve as crucial clauses in these contracts, ensuring a clear understanding of the circumstances under which the agreement can be terminated. Tailoring these contracts to specific employment arrangements, such as full-time, part-time, or per diem, ensures that the terms accurately reflect the working relationship.
Para su conveniencia, debajo del texto en español le brindamos la versión completa de este formulario en inglés. For your convenience, the complete English version of this form is attached below the Spanish version.
