Business FAQ's
Q: What are independent contractors?
A: In general, independent contractors are self-employed individuals in an independent trade, business, or profession who offer their services to the general public under a contract or agreement. However, whether workers are independent contractors or employees under federal or state law depends on the facts of each case. In general, the determination is based on the degree of control the business has over a worker. The more control the business has over the individual, the more likely that individual will be perceived as an employee and not an independent contractor.
Q: How do I determine if a worker is an employee or an independent contractor?
A: A worker is presumed to be an employee unless he or she meets specific criteria; the specific test used depends on the purpose. Some criteria are: (1) whether or not the business has the right to control the worker; (2) whether the worker’s services are an integral part of the business; (3) the permanency of the relationship; and (4) the worker’s investment in facilities, equipment, and tools.
Q: I gave workers a 1099. Does it mean they are automatically independent contractors?
A: No, a common misconception is that a worker’s classification is determined by whether a Form 1099 or Form W-2 is provided to them at the end of the year. The reality is the classification determination must always be made on the basis of whether the worker meets the specific criteria for an independent contractor established by the applicable federal or state law.
Q: How long can an independent contractor work for me?
A: While there is no specific limit, a continuing relationship between the business and worker is considered an indication of an employer/employee relationship. Since the relationship can change over time, if and when contracts are renewed or extended, review whether the worker still qualifies as an independent contractor.
Q: What are the paperwork requirements for independent contractors?
A: If you’ve made the determination that the person you’re paying is an independent contractor, you should have the contractor complete IRS form W-9. This form can be used to request the correct name and Taxpayer Identification Number of the worker. The Form W-9 should be kept in your files for four years for future references in case of any questions from the worker or the IRS. Additionally if you paid a independent contractor $600 or more for services provided throughout the year, you need to complete IRS Form 1099. A copy of the Form 1099 must be provided to the independent contractor and IRS.
Q: Can a company be on my payroll?
A: No it cannot. For tax reasons, employees must be individuals who have a Social Security Number, while companies only have Employer Identification Numbers (EIN).
Q: Do I have to give my employees benefits like paid vacations, sick leave, national holidays, etc?
A: No it is not mandatory; it is an incentive that the company gives to their employees. The only mandatory requirements for companies are paying at least the minimum wage, complying with Child-Labor Laws, and other federal mandated laws.
Q: Should my company have sales tax?
A: Your company is only required to have and report sales tax if you sell directly to customers, import and export products, and property business rentals.
Q: If I don’t have any employees do I have to report payroll?
A: If you have reported payroll in the past and have not made your account inactive with the state, it is mandatory to report payroll in 0’s until that account is closed or made inactive.
Q: Want to open a corporation?
A: Click the PDF on what steps to take to open a corporation.
Q: My boss wants to start using “working interviews” before hiring new employees. Job candidates would work for a few hours or days in the job to determine whether they are a good fit for the position. Do we have to pay the applicants for their time on the working interview?
A: Yes, these individuals must be paid. Federal, state, and local enforcement agencies will generally consider these individuals employees of your organization and enforce employment laws accordingly. Thus, you must pay these workers at least the minimum wage, withhold taxes, and comply with all other applicable employment laws for the period the individual performs work.
Q: If there is no activity/movement in my company, do I still have to file income taxes?
A: The answer is, Yes! It is required by the State of Florida and the Internal Revenue Service to file taxes if the company is opened according to the State of Florida, even if there is no movement.
Q: Can someone with an ITIN (Individual Taxpayer Identification Number) be included in a company’s payroll?
A: No, ITIN’s are only used for taxpayer reasons, not as a Social Security Number.
Q: How long is the process of opening a corporation?
A: Opening a corporation takes approximately 3 days for the entire process.