Business Type :

The hiring process can be a necessary but exhausting task. While it may be difficult to find the best employee to work for you, after you’ve done so, keeping them requires a bit of work. You have to obtain the correct documentation such as tax and insurance forms, purchase the insurance that is required by law for you to have, and maintain the appropriate regulations that have been determined the government.

From interviewing to creating an employee file, taking all the right steps will lead you to a successful employee-employer relationship without negative legal consequences.

Who is considered an employee?

The law states that an employee is any person that is hired for either a wage or salary in exchange for work. It differs vastly from that of an independent contractor, because the employer is responsible for any liability insurance in case they are injured on the job, as well as upholding any labor or age restrictions.

Pre-Screening

Before you hire an employee, you schedule an interview either on the phone or in person, or a combination of the two. Request that they bring the following with them to expedite the process.

  •    Resume
  •    License or Photo ID
  •    References
  •    Address, email, and phone number
  •    Contact information of past employers
  •    Samples of work or a portfolio; if this applies
  •    Any particular clothing (shoes, pants) if you are going to show them around a factory or business that has safety regulations

Documentation Needed

Once you have decided to hire the person as your new employee, there are several forms they need to fill out and forms you need to file on their behalf.

  •    From the employee:
    •    Social security card
    •    Any licenses if they apply to your business
    •    Certificates
    •    Proof of past employment
    •    School transcripts
  •    For the employer:
    •   W-2 and W-4 forms (they will assist with this)
    •    Form I-9
    •    Add employee to insurance
    •    Register employee with your state’s new hire reporting program

Contract

Both independent contractors and employees must sign a contract when starting to work. They differ in scope, and an employee contract usually focuses in on a long-term arrangement versus short term:

  •    A description of the responsibilities of that position
  •    Wage amount, delivery method, and frequency of payment
  •    Dress code, including who pays for the required items
  •    Rules on schedules, hours, call-ins, being late, etc.
  •    Terms of leave periods your company provides
  •    Acknowledgement that you are responsible for their taxes, health benefits, etc.
  •    What can result in termination
  •    What constitutes harassment (most states have specific rules for employers to put in place for their employees safety)

Insurance

When you have employees working for you, you must have insurance. This refers to liability, injury, and damage insurance, as well as personal health insurance benefits. Some states require you provide your employees with health care, others do not, so make sure to follow up with the provisions set forth by your state. When it comes to all other kinds of insurance, it is best to have more than what you think you might need. If someone is injured on the job, you are responsible for paying for their care.

Taxes

Employees are required to record payroll and supply the IRS with tax documents for all their employees. Both W-2s and W-4s are needed, and are relatively simple to fill out. Keeping on top of this will be helpful when you submit your own tax forms, as well as making it easier on your employees. The IRS charges fees if the information isn’t submitted or is incorrect, so implement the correct procedures, or hire an associate to handle all tax related situations for you.

Now that you’ve finished all parts of the hiring process, obtained all documentation, and submitted your tax forms, your employee can begin to work for you. Make certain to keep all records up-to-date and make any adjustments that are needed as you go along. The government has strict rules that you should follow, but it also makes for a healthy employee/employer relationship to do everything mentioned.

The Internal Revenue Service defines an independent contractor as “a business owner or contractor who provides services to other businesses.” They are responsible for their own social security, taxes, and retirement and health insurance plans and are not entitled to company coverages. If you choose to hire an independent contractor, you have to stay on top of the regulations set forth by the government.

There are stipulations, both relating to taxes and penalties, set in place to maintain what an independent contractor can do, how they get paid, and more. There are specific documents that you need to obtain from the independent contractor(s), as well as documents that they need to fill out so you can remain within the realms of the law. Taking the appropriate legal channels and completing the correct forms is a safe business practice.

Pre-Screening

Prior to hiring, either during an in person or over the phone interview, ask the independent contractor for the following information; this step will help you verify their legitimacy.

  •    How long have they been in business?
  •    How is the business is structured? (Number of employees, partnership or corporation, etc.)
  •    What is their contact information?
  •    What licenses do they carry?
  •    Who were their previous employers?
  •    How did the contractor advertise?
  •    Is their office in a facility or at home?
  •    Does the contractor carry insurance?

Documentation

After you’ve decided to hire a contractor, ask them for the following information, forms, and documents to verify if the contractor is legitimate.

  •    Hard copies of business cards, stationery, and any advertising records
  •    White pages listings
  •    Any aliases or assumed business names they operate under
  •    Professional licenses
  •    Certificates that prove insurance and liability
  •    Information on employees that work with them
  •    Copies of billing procedures
  •    Office rental lease
  •    Copies of IRS Form 1099-MISC that any previous employers issued to the contractor
  •    Hard copies of the contractor’s tax returns

Written Contract

Since the contractor works for your company on a service-rendering basis, it is vital to have a written contract stating the terms of agreement; this helps if there is ever a future dispute.

  •    A description of services
  •    Amount of pay, delivery method, and date of payment
  •    If the contractor is responsible for their expenses or if you will reimburse
  •    Whether you or the contractor provide materials and equipment
  •    A clause stating that you have both agreed to work together
  •    State what licenses and certificates the contractor holds
  •    Acknowledge that they are responsible for their own taxes, health benefits, etc.
  •    Length of contracted service
  •    Description of when you can terminate services
  •    Note that you are not responsible for any negligent actions of the contractor, as well as negating responsibility for any illegal activities that they might be involved in

Taxes

Independent contractors are held within a different bracket when it comes to paying for their taxes. An employee shares the responsibility for social security and Medicare with their employer, where a contractor is responsible for it on their own. As a hiring professional within a company, you must provide the IRS with tax related forms for any independent contractors and employees that are working for you, and the documents are not the same. Keep them separate, but make sure to have all the documents filed so you don’t get audited or have to pay any unnecessary fees.

After you’ve finished the interviewing process, and have obtained all relative documentation, you should submit all necessary tax forms to the IRS within the allotted time period. Hiring an independent contractor allows you to have the services rendered that you require, when and how you require them. However, the government has strict rules on how the contractor works with you, and following these rules will keep you and your company safe from any kind of tax fraud liability.

Whether you operate a single-person LLC, have a small business with just a few employees, sell goods and services, or receive business contracts in other states, many states require you to have a variety of business licenses and permits before you can legally begin operations. In addition, you will have to register your business with federal, state, and local taxing authorities. In the United States, there are an estimated 40,000 licensing authorities. The business licensing requirements and permits vary by jurisdiction and by industry.

Purpose Of Licenses And Permits

Starting a new enterprise or managing an ongoing concern involves so many activities that you must carry out, from registering a fictitious business name to registering for business taxes. All levels of the federal, state, county, and municipal government have some kind of business license, permit, and tax regulations. Licenses and permits have three primary purposes:

  •    Identify businesses and ensure that business owners can be held accountable for their actions.
  •    Protect the public health and safety.
  •    Maintain track of business revenues and profits for taxing regulations.

With so many departments and agencies involved in the administration of businesses across nearly every sector, the licensing and permitting requirements can become a bit daunting. You must perform a meticulous investigation the licensing and permit requirements that affect your industry. Do not ignore these important regulatory details. Being out of licensing and permit compliance puts your business in jeopardy, and hit you with costly penalties and interest. Noncompliance may even temporarily shut down your operations.

Types Of Business Licensing Requirements

Based on an array of factors, including the nature of your business, number of employees, and business locations, you will need several licenses and permits in order to conduct business in your location or territory. The following list is not comprehensive, but includes some of the most common kinds business licensing requirements:

  •    Federal Licenses

Most business will not have to worry about federal licensing. The exception may be investment advisory services and radio and television stations.

  •     State Licenses

Many states have licensing requirement based on certain occupations, including (but not limited to) doctors, nurses, consultant, insurance agents, real estate brokers, plumbers, electricians, building contractors, barbers, and cosmetologists. Contact your state government offices to get a complete list of occupations that require licensing.

  •    Business Licenses

If you operate within an incorporated city check with the authorities because you will likely need a license. If you are outside the city’s boundaries, you will probably need to comply with county requirements.

  •    Tax Permits

You will need to comply with IRS, state and local governmental agencies for applicable tax permits. This process starts with registering your business to receive a federal tax identification number.

  •    Certificate Of Occupancy

If you plan to occupy space to work, you will likely need to apply for a Certificate of Occupancy from a city or county zoning department.

  •    Health Department Permit

This is primarily necessary for businesses that handle medical care, food prep, child care, or other businesses where the body is exposed to outside elements.

  •    Building Permits

If you plan to renovate your workspace or build a new building in order to operate a business, you will likely need a building permit from the local municipality or county.

Other types of permits include sign permits that control the appearance and/or location of business signs and fire department permits, which govern the public safety of business locations.

Make sure that you understand the different licenses and permits required for the jurisdictions where you intend to operate. Do not assume that certain licenses and permits do not apply to your business, For example, IT services companies or IT consultants operating in the State of Washington may be required to obtain taxing permits if they offer certain IT services.

Starting The Licensing And Permitting Process

Make sure that you complete the necessary due diligence so that you have the proper local license and permits in the state where you intend to do business. You can began your search online, but always verify the information you receive. The Secretary of State Office is usually a good place to start your search. Then, work your way to the county and municipal levels of government. Many business owners find researching the various departments to be a bit overwhelming and hire third- party services to simplify this the task of business licensing requirements.

Even if you are an experienced person operating a business in your chosen profession or industry, you will find it challenging to keep up with all of the licensing and permitting responsibilities. If you plan to open a new business or expand nationally, you must ensure that you identify the licenses and permits that you need to operate your enterprise legally.

Part of being a responsible business owner is knowing that sometimes you need legal help. If you lack expertise in law, hiring an attorney that is skilled in the regulations and statutes enforced on businesses is the best thing you can do for your business.

An attorney can inform you of up-to-date private and public laws that deal with merchandising, trades, and sales, keeping your business functioning smoothly without any major hiccups. They can also second as your personal attorney. Selecting a lawyer that’s not only skilled, but the right fit for you can take a little bit of research and time; however, the rewards show themselves immediately.

Check Credentials

This is a very important part of hiring an attorney. Today, there are multiple ways to print out fake licenses for unsavory persons to hang up on their walls. This is why you must conduct a background search and contact your state bar association. Ask the lawyer to provide you with examples of their previous work history, cases, clients, etc.—anything that they can divulge without breaking client confidentiality.

Get Recommendations

Word of mouth is a large part of an attorney’s reputation. How the community as a whole views an attorney or firm can tell you a lot about them. Contact business associates and ask for recommendations, keeping in mind your particular business needs. They can shed some light on what is available in your area.

Focus on the following when vetting recommendations:

  •    Areas of expertise

You’ll want to choose someone that knows the ins and outs of your type of business.

  •    The size of the law firm or attorney’s client load

Don’t choose someone that already has a lot on their plate.

  •    Fees

You have a budget you need to adhere to, so find someone that charges a fair price for excellent service.

Read Online Reviews

Don’t stop your search after asking for recommendations. There are websites where you can plug in keywords that will give you a list of reputable attorneys for hire. The Internet also has client reviews, which can give you valuable insight and, at the very least, give you topics to address if you decide to interview that lawyer. A good attorney can think fast on their feet and will be able to address negative reviews.

Have A Consultation

Almost all lawyers and firms offer free or low-cost consultations to prospective clients. Narrow down your search and schedule a consultation to discuss your business, the needs that the attorney will fill, and what you would expect out of their service.

Also, ask them questions that are creative or out of the box to obtain a deeper understanding of how they operate:

  •    “How has your law firm evolved over the years?”

Learn about the lawyer’s development.

  •   “Which is more important: success or money?

Depending upon their answer, you’ll know if their goals align with your own.

  •    “What do you enjoy most about your work?”

This is pretty clear-cut. Are they passionate about the law? If so, it will show in the service that they provide.

  •    “What are the qualities of a successful business?”

Open the floor on what they view as responsible business practices.

  •    “What is one challenge you foresee and what do you recommend doing to solve it?”

Gauge their efficiency and ability to create creative solutions on the spot.

  •    “Do you have any hesitations about taking me on as a client?”

This is very eye opening and informative; be prepared to address what they say calmly and professionally.)

Utilize a few icebreakers; keep it professional, but also choose what will provide you with the answers you seek.

  •    “What are three words you would use to describe yourself?”
  •    “What motivates you?”
  •    “How do you perform under pressure?”
  •    “If you could go to dinner with any three people, who and why?”

Finalizing Your Decision

The most important thing to do is to select the business attorney that best complements your business. Incorporate all aspects of your research into your decision-making process: reputation, recommendations, credentials, fees, experience and expertise, and lastly, what you learned during the consultation process.

As a responsible business owner, you know that your business needs to be up to code and following all regulations, like licensure, to ensure that your business runs smoothly. A proper attorney, the right attorney, can show you the proper methods for taxes, sales, and profits; purchasing within your country and outside of it (international laws can be complex); and so much more.

Explore your options, get to know what is available to you, and choose the right fit!

When you or your business rents a venue for a special event, liability is a major concern for all involved. Many venues won’t do business with you until you provide proof that you’re insured for anything that might go wrong there—they want to be certain that if something does go wrong, they’re not the ones left holding the bag.

If you have an exceptionally generous business insurance policy, off-site events might be covered, but in the vast majority of cases, you’re going to need special event insurance. And even if you’re hosting an event on your own property, special event insurance might still be a smart investment.

The Basics Of Special Event Insurance

Whether you’re scheduling a small party for a few investors or an after-hours celebration of a successful job for your entire company, there will always be issues of liability behind the scenes. When you take your event to a venue owned by a third party, those issues become unavoidable; special event insurance becomes mandatory.

The specifics of a special event insurance arrangement can vary wildly according to what you expect at the venue. An event featuring alcohol, potentially dangerous entertainment, or simply a large number of people will require a very different policy from a dry, safe, small event at a local park.

At the most basic level, you should expect to be required to obtain liability insurance, plus liquor liability insurance if alcohol is being served. But certain venues may require more, or you may wish to expand coverage to safeguard against potential losses.

Things To Cover

There are many, many potential points of loss at a special event, but expanding your coverage can protect you against many of them. Consider obtaining coverage against:

  •   Cancellation or postponement

If something forces you to suspend the event, you may be able to recoup some of your losses. Inclement weather, no-show vendors, and other surprises can cost you thousands, so it’s best to be secure.

  •   Gifts or other on-site valuables

Have a gift exchange, an expensive technical demo, or other valuables on-site at your special event? Be certain that you’re protected against loss and theft, as many venues wash their hands of liability.

  •   Lost deposits

Sometimes, deposits aren’t quite in line with the risk at hand. For events where you stand to lose disproportionate deposits, coverage from a third party can be a great idea.

If extreme weather, uncooperative vendors, or any other problem arises—which could cost you real, serious losses—a thorough special event insurance policy can be a lifesaver. You also get to relax and worry less about these issues when you’re thoroughly covered; a less stressed organizer is a superior organizer, meaning your event will be a bigger success with a lower likelihood of actually needing to rely upon any of these policies.

Beware Of Going Cheap

If you find yourself hosting an event at a venue without strict liability insurance requirements—likely because you or another involved party owns the venue—don’t ignore the possibility of unexpected losses. Consider investing in special event insurance as a safety precaution for your own sake.

Consider this: Venues insist upon coverage to protect themselves against damage, liability, and other losses. Why would you forgo those same protections when your company becomes the one potentially at a loss?

Depending on the situation, of course, your business insurance or other policies may protect you against these issues and more, but it’s important to check and confirm without assuming. If a guest causes damage, or gets injured in some unexpected way, being on the hook without recourse can turn a special event from a boon to boondoggle in seconds.

Many businesses find themselves viewing liability insurance as an unnecessary drain on their coffers, a mandatory waste of funds enforced from on high, but this is an attitude for the fortunate. If your business ever finds itself facing the expense of a successful lawsuit without the protections of special event insurance, you certainly won’t be glad you avoided an extra expenditure.

Just be certain that you’re acquiring appropriate, thorough, secure coverage for your special events. Watch for gaps where you need coverage most, be certain that you’re covered for the unusual circumstances unique to your event, and don’t assume the bare minimum is enough—for anything. The minimum required by law or a venue isn’t necessarily your best investment as a company looking at potential long-term outcomes.

Much as it may surprise many employees, letting go of staff members is one of the more difficult business owner responsibilities. While you may feel a sense of relief once you finally get rid of a “bad apple,” it probably won’t make up for the weeks, months, or even years you might have to deal with the stress and discomfort of the termination.

As any human resources professional will tell you, replacing an employee is an expensive and time-consuming proposition. Researching, recruiting, interviewing, conducting background and reference checks, and pre-employment testing all prevent you from focusing on the mission-critical tasks of running your business. Then your business has to accommodate a new employee because he or she doesn’t reach peak efficiency until fully trained. In addition, there’s the hidden cost of paying the new employee while your former employee may be collecting unemployment benefits, which essentially means you’re paying two people to do one job.

One of your business owner responsibilities is to manage risk and problem employees can certainly pose a risk to your business. You can minimize that potential risk if you remember the following:

Keep Calm & Carry On

Primary among your business owner responsibilities is to keep your head while everyone around you is losing theirs. A challenge at the best of times, it’s even more important when dealing with disciplinary problems. No matter how difficult an employee may become, it is pretty much guaranteed to get worse if you lose control. Words spoken out of anger can’t be retrieved, nor can actions taken in haste be undone. The problems caused by a difficult employee often pale in comparison to those that arise if the situation is managed poorly.

Document EVERYTHING

When it comes to troublesome employees, you will discover, if you haven’t already, that your business owner responsibilities include accurate and timely record keeping. Not only will documenting performance and/or behavioral issues assist you in keeping track of disciplinary matters, such information may become necessary to support your position in the event of an unemployment claim, discrimination charge, or wrongful discharge action. However, effective documentation requires more than simply recording incidents as they happen; it should also include:

  • A complete description of the event or circumstances that caused the employee to be written up
  • The names of any and all persons who were witness to the incident
  •  Even employers who record each incident fall short in regard to certain specifics. Simply calling something a performance issue or bad attitude is of little use to you unless you go into detail about it, such as:
    • What was expected?
    • What actually happened?
    • What resulted from the mistake or conduct?
    • What could the employee have done to prevent the outcome?
    • What were the disciplinary consequences to the employee?

If you are documenting a disciplinary action (such as a warning), have the employee sign that he or she received it. If the worker balks (which is common), simply state that they don’t need to sign on the front of the form but explain why they don’t wish to sign it on the back. You now have evidence that the warning was discussed with the worker.

Don’t Act Alone

The most important of your business owner responsibilities is to sustain your business. A problem employee can threaten that. This is why you should always have a witness at a disciplinary action meeting. “He said, she said” usually doesn’t end well for employers. In fact, in unemployment and discrimination matters, administrative hearing officers must construe the facts “in the light most favorable to the claimant.” If the worker refuses to sign a warning or write on the reverse side as suggested and you don’t have a witness that the meeting happened, the future of your business may ultimately rest on whether you are more credible than your employee. A witness can make all the difference.

It isn’t easy to deal with difficult employees effectively, but it is possible. More importantly, it’s necessary. And if you don’t? Expect headaches that may include an unemployment claim (which can increase your payroll taxes), a discrimination claim, and/or a very expensive wrongful termination lawsuit, not to mention morale issues among your remaining personnel.

No matter how diligently you carry out your business owner responsibilities regarding difficult employees, you won’t be able to prevent those people from taking legal action if that’s what they want to do. You can, however, increase the likelihood that you’ll come out on top and can keep taking care of business.

InsureYourCompany.com has earned the Registered Employee Benefits Consultants (REBC) professional designation from The American College Of Financial Services, Bryn Mawr, PA.

Gauri Gupta, ChHC, is an integral part of InsureYourCompany.com since she started as an employee benefits consultant in 2008. She is a leader in her field and was named one of United HealthCare’s top brokers in 2013, (News India Times march 7th, 2014) Always looking to improve service to our clients, she now is the Director of the Employee Benefits Division, helping business find the right coverage with the best service.

The REBC program was established in 1990 to raise professional standards and improve the methods of selling and services employee benefit plans. The program covers group benefits, retirement plans, managed care and other health insurance topics, compensation and personal management. Candidates for the REBC designation must complete five courses and ten hours of supervised examinations. They must also fulfill stringent experience and ethics requirements. Over 1,950 individuals have been awarded the REBC designation including those grated by The College since assuming ownership of the program in 1995.

The American College Of Financial Services is the nation’s largest non-profit institution devoted to financial education. Holding the highest level of academic accreditation, The American College has served as a valued business partner to banks, brokerage firms, insurance companies and other for over 86 years. The American College’s faculty represents some of the financial services industry’s foremost thought leaders. For more information, visit the REBC page.

In general, most management advice tends to focus on things like hiring, managing, and motivating employees. There’s good reason for that—after all, the point of management is to move your business forward, and the way to do that is with a motivated, professional workforce.

But sometimes, for different reasons, it just doesn’t work out with an employee, and the time comes where it’s best to part ways. It’s typically not a fun experience, but it’s something that is occasionally necessary. And, as an employer, it’s critical that you not only know when to let someone go, but what your business owner responsibilities are before, during, and after the termination.

Before The Termination

The first thing to understand, before terminating any employee, is that employee’s status in regards to any Employment At Will policy or statutes in your state. “Employment At Will” is a term that means that an employer or employee may terminate their employment at any time, for any reason.

However, while almost every state allows at-will employment policies, there are differences between states in terms of the specific conditions (and exceptions) of their at will statutes. Many states and the Federal Government have likewise taken steps to curb the breadth of the at will concept, so it’s critical to understand exactly where your state stands in the regard before moving forward.

Further, employment contracts may be in place, which supersede any at-will employment guidelines. These contracts may also spell out additional business owner responsibilities, so make sure you fully understand the terms of any such agreement before commencing with the termination.

Completing The Termination

Let’s assume that no employment contract is in place, and your state has an at-will employment policy in place, which (for the vast majority of scenarios) is likely to be the case. During the termination, you as the business owner still have certain responsibilities in protecting your company.

Even though your state likely allows Employment At Will, that doesn’t mean that you’re automatically without any liability whatsoever when terminating an employee. For instance, you’re not permitted to terminate employees for any discriminatory reasons, such as race, religion, sex or age, among others. Also, some states have modified their at-will employment statutes to include concepts like good faith employment, which provides additional protection for employees from wrongful termination.

Post-Termination Responsibilities

Assuming you’ve completed the employee termination successfully, the law still mandates ongoing business owner responsibilities after the termination. Some of these responsibilities include:

  •    Severance Payments

Even though most states don’t require that severance payments be made to terminated employees, they are often paid in order to reduce wrongful termination lawsuits and other related actions. However, you should consult an attorney before agreeing to make any kind of severance package.

  •    Providing Continued Health Benefits

Under federal law, business owner responsibilities for companies with 20 or more employees include providing COBRA healthcare benefits to employees that have been terminated. And even in companies with fewer than 20 employees, individual states may mandate coverage be provided anyway.

  •    Certificates Of Creditable Coverage

If you have a group health plan for your employees, and you terminate an employee, you’re required under HIPAA to provide a Certificate of Creditable Coverage for the period in which the employee was covered under your plan. This certificate will aid the employee in obtaining future healthcare coverage.

Terminating Independent Contractors

Many companies utilize independent contractors and consultants at various times, and there are a lot of benefits to utilizing them. In most cases, contractors are not subject to the same healthcare coverage and termination protections of regular employees. However, there are considerations to take into account when terminating contractors.

Remember, as indicated by the name, contractors work under a contract. And, as we mentioned above, an employment contract typically supersedes Employment At Will statutes. As a result, it’s very important to review the contractor’s agreement prior to termination. Hopefully, there’s a provision in the contract stating the agreement is subject to Employment At Will, but if there is anything different in the agreement, that language will likely take precedence.

Protecting Yourself And Your Business

The key takeaway from all of this is to remember that there are business owner responsibilities prior to, during, and after terminating employees. And what’s more, failure to meet some of these responsibilities can expose your company to significant liability and legal costs. Look into your insurance policy to see if your business  owner policy covers employment practices liability insurance.

That’s why it’s critical to meet with an attorney who specializes in employment law well in advance to understand your rights and obligations under state and federal law, so that you can take steps to protect your company and assets. Remember, terminating employees can be hard, but it’s made much harder if you don’t take steps to protect your business first.

Working as an independent contractor comes with great benefits: flexible schedules, choosing your own work, and occasional work sessions in pajamas are favorite perks among freelancers. At tax time, however, independent contractors often get the short end of the stick, partly because they don’t always know how to take advantage of 1099 deductions.

The payments made to independent contractors by businesses are usually reported to the IRS on a 1099 form. If you, as an independent contractor, completed a W9 form when you began working for a client or company, then any income related to that organization is likely to be reported on a 1099 and you will have to claim it when you file taxes.

Because taxes are not withdrawn from payments made to an independent contractor, the contractor must file and pay all his own taxes. On an annual tax return, 1099 tax deductions can help contractors reduce what can otherwise be a heavy tax burden. Here are some of the most popular types of deductions for independent contractors:

Home Office Deduction

One of the easiest—and most dangerous—deductions to claim, the home office deduction gets a bad rep for causing audits. Claiming a home office deduction doesn’t automatically put you in red-flag territory with the IRS, but you do have to ensure that you use the space you claim solely for running your business. If you work at your dining room table during the day, but you use it for the kids’ homework and dinner in the evening, that space isn’t eligible for the deduction.

Home office deductions are entered as a percentage of your entire square footage, so you’ll need measurements for your office space, your entire home, and the value of your home or mortgage payment to claim this deduction. The IRS doesn’t typically require additional documentation for most home office deduction claims.

401K Plans

Self-employed individuals can contribute a certain portion of income each year as a 401k deferral. In 2015, the total contribution amount allowed by the IRS is $18,000 per person. While these salary deferrals may be tax-free, early disbursements from the retirement plan will be taxed and may come with a penalty, making it important for independent contractors to understand both current and future financial needs before committing to a salary deferral.

Vehicle Deductions

Contractors that use their vehicles for business purposes can either deduct a standard mileage rate or actual vehicle expenses on tax returns. For 2015, the standard mileage rate for business travel is $0.57 per mile. To deduct mileage, you simply claim the total amount of miles driven for business purposes in a year on your return.

You’ll also need to report the starting and ending mileage for the vehicle for the year, which may show more mileage than you drove for business purposes if you use a vehicle for personal driving too. You don’t have to provide the IRS with a mileage log, but you do need to keep a log of all trips and mileage for audit purposes.

Sometimes, claiming vehicle expenses instead of mileage nets you a larger deduction. Most people don’t go this route, though, because you have to keep copies of all insurance, registration, depreciation, loan payments, licensure, maintenance, parking, and toll receipts.

Depreciation Deductions

Independent contractors that purchase and use equipment for their business may be able to take a depreciation deduction each year. Equipment might include vehicles, special tools, and machinery. A seamstress might take deductions on a sewing machine; a painter might take deductions on a pressure washer used to prepare the exterior of homes for painting.

The IRS requires that property meet some conditions to be eligible for depreciation:

  • The property must be in use over a period of one year
  • The contractor should be able to estimate the useful life for the property
  • The contractor must own the property
  • The contractor must use the property to generate income

Health Insurance Premium Deductions

Self-employed individuals may be able to deduct the amount paid in health insurance premiums each year. If your health plan is eligible for the deduction, you simply claim the total paid on your return each year. Keep receipts or check stubs proving you made the payments to back up your claims.

Hundreds of 1099 tax deductions exist for small businesses and independent contractors, so it’s often best to consult a professional when handling tax returns each year. Remember: To claim 1099 tax deductions each year, you’ll need to complete a Schedule C and file the long 1040 form rather than the 1040EZ form. Some deductions may require completion of an additional form or calculation worksheet, but it’s well worth the extra effort to make sure you don’t run into any problems down the line!

On June 25, 2015, The Supreme Court of the United States ruled that the Affordable Care Act is constitutional, and that it will continue until further notice. There are many effects on small business that come both from this ruling and from the Affordable Care Act itself.

Earlier in its existence, the Affordable Care Act faced stiff contention from many politicians and was under threat. Many businesses have considered it to be challenging, if not downright problematic. Despite it all, the Affordable Care Act is here to stay.

Fortunately, as a small business owner, you can adapt to this with relative ease. The Affordable Care Act is reasonably simple to understand if you pay attention to the most salient parts of it for your situation as a small business owner.

Here are a few important facts about the Affordable Care Act to keep in mind:

Most Regulations Do Not Apply To Businesses

For the most part, the Affordable Care Act is not concerned with business. The effects on small business are thus fairly minor, which can be a relief if you have been fretting over potential consequences.

The most relevant aspects of the Affordable Care Act involve when you must purchase health insurance for your employees and when you have the option to do so. Since there may be tax credits involved in making this purchase—and it is most likely tax-deductible as a business expense—it is in your best interests to offer health insurance to your employees if you can. The Affordable Care Act merely makes this a more accessible benefit you can provide.

In Many Cases, You Must Offer Coverage

Larger businesses (which are defined within the Affordable Care Act as having more than 50 employees) must provide health insurance coverage for each full-time employee. Even if you have part-time employees but still fit the criteria of having 50 employees or more, you still have to provide every full-time employee with health insurance.

While you may not think having 50 or so employees makes you a “large business,” the Supreme Court’s support of the Affordable Care Act requires you to operate within its bounds.

If you choose not to provide health insurance to your employees who work full-time, you will be expected to pay an additional fee with your taxes per employee. This started in 2015, so your 2016 taxes will be affected if you choose to ignore this regulation.

Fortunately, the marketplace for insurance coverage has also been rendered more affordable on the whole, which may actually make your costs more reasonable for group health insurance.

The Smallest Companies Can Still Help Their Employees

No matter how small your company is, you can still offer insurance benefits to your employees thanks to the Affordable Care Act. If you have less than 25 full-time employees, you can use the marketplace in the same way as larger businesses can to buy insurance coverage with subsidies.

This is both an advantage to your bottom line and a substantial perk to your employees by providing care to their families and reducing their tax burden.

The Affordable Care Act has changed the landscape of health insurance in the United States, especially with the Supreme Court now affirming its continuation. As a small business owner, you can take advantage of these opportunities to provide healthcare coverage for your employees without breaking the bank.

Custom Business Insurance Solutions

What type of coverage are you interested for your Fitness Instructors business ?

Home Insurance

Adipisicing elit, sed do eiusmod tempor ncidi quia conseq uuntur magni dolores eos qurti uptatem sequi nesciunt.

Home Insurance

Adipisicing elit, sed do eiusmod tempor ncidi quia conseq uuntur magni dolores eos qurti uptatem sequi nesciunt.

Home Insurance

Adipisicing elit, sed do eiusmod tempor ncidi quia conseq uuntur magni dolores eos qurti uptatem sequi nesciunt.

Home Insurance

Adipisicing elit, sed do eiusmod tempor ncidi quia conseq uuntur magni dolores eos qurti uptatem sequi nesciunt.

Home Insurance

Adipisicing elit, sed do eiusmod tempor ncidi quia conseq uuntur magni dolores eos qurti uptatem sequi nesciunt.

Home Insurance

Adipisicing elit, sed do eiusmod tempor ncidi quia conseq uuntur magni dolores eos qurti uptatem sequi nesciunt.

Home Insurance

Adipisicing elit, sed do eiusmod tempor ncidi quia conseq uuntur magni dolores eos qurti uptatem sequi nesciunt.

Home Insurance

Adipisicing elit, sed do eiusmod tempor ncidi quia conseq uuntur magni dolores eos qurti uptatem sequi nesciunt.

Home Insurance

Adipisicing elit, sed do eiusmod tempor ncidi quia conseq uuntur magni dolores eos qurti uptatem sequi nesciunt.

Custom Business Insurance Solutions

Business Insurance For Your Company

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute iruLorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod

Read More

Business Insurance For Your Company

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute iruLorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod

Read More

We Had An Idea To Make Insurance Better For Business Owners

InsureYourCompany.com has been treating clients like family for over 15 years. You’ll never have to talk to an automated phone system—we have business insurance experts ready to provide personalized customer service, not only helping you with your insurance and employee benefits needs, but showing you how to be a smarter business owner.

Learn More

Who we Help

We Help Information Technology Professionals

If you are in the IT industry InsureYourCompany.com is the insurance agent you want to work with, we are technology insurance experts and have changed the way you do business. See below a list of professionals who we help today.

App Developers Computer Consultants Computer Manufacturers Computer Repair and installation Data Scientists Data Storage companies Digital Marketing Agencies IT Consultants IT Project Managers IT Service Providers IT Staffing Agencies IT Staffing Companies Network Security Companies Programmers SEO and SEM Consultants Social Media Consultants Software developers Technical Writers Technology Companies Telecoms Web Designers Web developers Web Hosting

BEST SERVICES FOR YOU

Lorem ipsum, or lipsum as it is sometimes known, is dummy text used in laying out print, graphic or web designs. The passage is attributed to an unknown typesetter in the 15th century who is thought to have scrambled parts of Cicero's De Finibus Bonorum et Malorum for use in a type specimen book. It usually begins with: