Employee vs Independent contractors

Differences to the employer during times of paying and especially the withholding of tax payroll is that the employer can withhold the tax for the employees but in the case of an independent contractor, the employer cannot withhold the tax or the social security.

Employers who might classify employees as independent distributors might land into trouble with the tax authority and could cause the business a fortune. Penalties for every employer might vary depending on the state at which the employees were classified as independent contractors (Davidov et al., pg567). In case the misclassification is not intended, the employer can have the following serious implications by law. Such penalties include being fined $50 per employee, who never filed a complaint form, 1.5% wages and 40% of the Medicare and social security to be charged from the employer if the taxes were not withheld. Interests are accrued on every penalty on a daily basis since the day they were supposed to be deposited (Bagley et al., pg227).  A tax penalty which is equated to 0.5% of every unpaid tax for every month up to 25% of the total accumulated tax.

Reporting differences between the employees and the independent contractors are basically according to the job ratings. An independent contractor can work for as many employers as possible and fill in his or her attendance books (Bagley et al., pg227). For the case of employees, they only have one employer who they report to on a daily basis. An independent contractor works according to his or her schedule while an employee has a set of time recommended by the employer.

A person can be classified as an independent contractor if he or she works on his or her terms and in most cases, an independent distributor offers consulting services to one or more companies. An individual can be an independent contractor mostly because they have a contract duly signed by both parties (Davidov et al., pg567). Procedures include having a signed contract to indicate that the person is not an employee but an independent contractor, employment benefits are never awarded to the individual and serious steps need to be taken when doing so such as having a record to ensure that all employee and independent contractors are updated regularly.

 

 

 

 

 

 

 

 

 

 

 

 

 

Works cited

Bagley, Constance E, and Craig E. Dauchy. The Entrepreneur's Guide to Law and Strategy. ,       2018. Print.

 Davidov, Guy, and Brian Langille. The Idea of Labour Law. Oxford: Oxford University Press,    2011. Print.