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.
Ohio Contract with Veterinarian Assistant as Independent Contractor with Provisions for Termination with or without Cause: Explained When hiring a veterinarian assistant in Ohio, it is crucial to establish a clear agreement with the individual hired. This agreement, often referred to as a contract, lays out the terms and conditions of the working relationship between the veterinarian practice and the assistant. In Ohio, there are various types of contracts that can be utilized when hiring a veterinarian assistant as an independent contractor. Some common types include: 1. General Independent Contractor Agreement: This type of contract outlines the general terms and conditions of the agreement between the veterinarian practice and the assistant. It includes provisions for termination with or without cause, which means either party can end the contract at any time, provided they provide a valid reason or simply by opting to do so. 2. At-will Independent Contractor Agreement: This contract type allows either party, the veterinarian practice or the assistant, to terminate the contract at any time, without having to provide a specific reason. It grants flexibility to both parties while ensuring that the working relationship remains fair and mutually beneficial. 3. Fixed-term Independent Contractor Agreement: In this type of contract, the duration of the working relationship between the veterinarian practice and the assistant is predetermined. It specifies the start and end date of the contract, outlining that both parties are bound to the agreement until the fixed term concludes. However, there may still be provisions for termination with or without cause during the specified term. Regardless of the specific type of contract used, it is crucial to include the following key provisions when hiring a veterinarian assistant as an independent contractor in Ohio: a. Identification of the Parties: The contract should clearly state the names and addresses of both the veterinarian practice and the assistant. b. Nature of Relationship: It is important to specify that the veterinarian assistant is an independent contractor and not an employee. This avoids any misinterpretation of the working relationship for either party. c. Scope of Work: The contract should outline the specific duties and responsibilities of the assistant, including tasks related to patient care, administrative support, and any other relevant responsibilities. d. Compensation: The contract should state the agreed-upon compensation and payment terms for the assistant's services. This can be hourly, on a commission basis, or a fixed fee per task. e. Termination Clause: This clause must clearly describe the provisions for termination, both with and without cause. It should specify the notice period required by either party and any other conditions that need to be met for a valid termination. f. Confidentiality and Non-Disclosure: To protect sensitive information, the contract should include a confidentiality and non-disclosure clause, which prohibits the assistant from sharing any confidential or proprietary information about the veterinarian practice or its clients. g. Governing Law: It is essential to state that the contract is governed by and interpreted according to Ohio state laws. Before finalizing any contract, it's advisable to seek legal counsel to ensure compliance with local regulations and to tailor the agreement to the specific needs of the veterinarian practice and the assistant hired. By having a comprehensive and detailed contract in place, both parties can build a solid foundation for a successful working relationship.
