[lappy512]

Jon,

Wouldn't paying people as a Independent Contractor involve sending them a 1099-MISC form instead of a W2 form? Thus, they'll have to pay their own FICA tax, saving you money and hassle.

[Aletheides]

Erin it's pretty amazing that you have access to such details like that concerning the company. What a learning experience!

[JLeezer]

Originally Posted by lappy512

Jon,

Wouldn't paying people as a Independent Contractor involve sending them a 1099-MISC form instead of a W2 form? Thus, they'll have to pay their own FICA tax, saving you money and hassle.

Absolutely correct about shifting some of the tax burden to the independent contractor; hassle, on the other hand, is still involved regardless of what classification the person doing the work falls under. And the real issue here is whether the person is actually an independent contractor or an employee. There are certainly ways to design the position being filled to be more conducive of one type or the other, but care and caution must be exercised to ensure that the correct classification is actually used. The minimal amount of tax savings can easily be wiped out if the IRS comes knocking and reclassifies your "contractors" as employees...let alone the fines and interest.

Also of note, at least in the technology industry, contractors generally cost a substantial amount more than employees. There is most likely little to no real savings if you have a firm grip on your actual expenses.

[warrensway]

Salaried workers are normally bad for the company if you mix a straight salary with a commission base though it can work wonders.