Statutory Employee Essay

When an independent contractor earns compensation for providing services or doing work and is classified as a self-employed individual rather than an employee, this is considered to be independent contractor income. This type of income will listed on Form 1099-MISC, which is where other types of income is listed.

Self-employed people will run their own business, they will be contracted to provide a service their clients. They will not be paid through PAYE and they do not have the same employment rights as employees or workers, Self-employed people will however still have protection for their health and safety on a client’s premises, they will have their rights and responsibilities set out in the terms of the contract with the client. They will not be entitled to holiday pay. They may however in some cases be classed as self-employed for tax purposes but classed as an employee or worker for employment rights. See point 2 Appendix

Three different types of employment status are an employee, a worker and self-employed. An employee can be part-time, full-time, permanent or temporary. They will work under a contract of employment which can be written or verbal. They have full rights. All employees will be workers but not all workers are employees. Workers do still have some rights. Workers will be working under various contracts. Workers do have part rights. This is one

IRS (2011) Employee vs. Independent Contractor – Seven Tips for Business Owners. http://www.irs.gov/newsroom/article/0,,id=173423,00.html Last accessed January 3, 2012.

Employee recruitment and selection are crucial processes amongst other activities of an organization when it comes to employment and people management. It is a general knowledge that the most important asset of an organization is its “employees” since they offer perspectives, values and attributes to organizational life; which if managed effectively can be of considerable benefits to the organization.

The distinction is important from a legal standpoint as with an employee, a company must without Social Security, Medicare, and income taxes from wages, in contrast, none are withheld for contractors; employment and labor laws do not apply to independent contractors (U.S. Department of Health and Human Services, 2015). If the company controls how and what job the worker does, then you are an employee. 2. Report misclassification. “If you are misclassified as an independent contractor, the IRS will do the work for you. There's a form called the SS-8 that you can fill out to have them determine whether or not you're misclassified” (Ballman, 2012, para.

It would be unusual to classify outside sales persons as self-employed, unless they were already established and self-employed businesses, and actually only had retail partner agreements.

2. Determine which framework you would use to assess your own employees, why you would use it and how it would differentiate employees.

SOLE PROPRIETORSHIP: It is an unincorporated business with one owner who pays personal income tax on profits from the business. With little government regulation, they are the simplest business to set up or take apart, making them popular among individual self contractors or business owners. The benefit of the sole proprietorship is the tax advantage. The disadvantage of a sole proprietorship is obtaining capital funding.

Payroll taxes first appeared numerous years ago and have since evolved, grown, and underwent major changes. Payroll taxes are taxes that are paid by employers and their employees. Payroll taxes are collected by the federal, state, and local governments to fund certain programs or projects. The employee’s tax proportion is typically deducted from the employee’s wages every earning period, and the employer fraction of the payroll taxes are paid directly by the employer and are based upon their employee’s wages. The amount of payroll taxes that must be paid are required to be reported to the Internal Revenue Service and the employer’s state and local taxing agencies. Smaller businesses tend to lean towards independent contractors because the business is not required to pay taxes for independent contractors. Independent contractors are considered self- employed and are responsible for the employee as well as the employer portion of payroll taxes.

According to what I researched off of the Internal Revenue Service, self employment tax only refers to social security and medicare tax. It is inputted on a Schedule SE when doing the tax return. Salaried earners who get a W-2 have their employer figure out their social security and medicare tax. So that means that one who is self employed they get to deduct the employer portion of the self employed tax on their adjusted gross income. The tax is also based off of 92.35 of their net earnings. I do not believe that these two items give a self employed person that much more of a tax advantage than the person who earns a w-2. The self employed person has to work hard to keep their business going and growing. They have

Workers who complete jobs for a company can be classified into two groups: employees or independent contractors. Common-law rules state that anyone who performs services for a company that controls what work is to be performed and how it is to be performed is classified as an employee. An independent contractor is a person who performs work for a company, or independently, but remain free to perform the work without restrictions from the employer (Internal Revenue Service, 2017).

Both the salaried and self employed individual must have been employed or in business for a minimum of 2

LLc are considered self-employed and self-employment taxes are paid in contributions to medical care and social security. Plus, the entire net income of LLC is subject to this tax.

Would you rather be self-employed or work for someone else? A person who is self-employed is an individual that works for him or herself instead of working for an employer that pays salary or wages. The individual is known as the primary or sole operator that earns their income through conducting profitable operations from their business. There are a lot of key factors to consider when deciding to become self-employed; personality traits and lifestyle choices are a few amongst many.