Lesson 1.1 Employee/Independent Contractor

If a work has made a significant financial investment in the job, has business expenses that are not reimbursed or has made his/her services available to the general public the the worker ma be considered an ______ _______

*INDEPENDENT CONTRACTOR*

Employee or Independent Contractor?: A) Can set own hours, determine own sequence of work? B) Works exclusively for the employer? C) Is required to comply with employer's instructions about when, where and how to work? D) Is hired by the employer? E) Can work for Mutiliple employers; services available to the public. F) Is self-employed?

A) *INDEPENDENT CONTRACTOR* Can set own hours, determine own sequence of work? B) *EMPLOYEE* Works exclusively for the employer? C) *EMPLOYEE* Is required to comply with employer's instructions about when, where and how to work? D) *EMPLOYEE* Is hired by the employer? E) *INDEPENDENT CONTRACTOR* Can work for Mutiliple employers; services available to the public. F) *INDEPENDENT CONTRACTOR* Is self-employed?

When hiring a worker, company must make decision to classify the worker as either:

A) Employee B) Independent Contractor

As long as the independent contractor provides the company with a Taxpayer Identification Number (TIN), the employer's only obligation is to give the contractor a completed _____ _____ at the end of the year.

As long as the independent contractor provides the company with a Taxpayer Identification Number (TIN), the employer's only obligation is to give the contractor a completed *FORM 1099-MISC* at the end of the year.

_____ control is the right to direct or control the means by which the worker performs the work to be done. This includes instructions and training provided by the employer.

BEHAVIORAL CONTROL

Detailed instructions for completing a job tend to reflect and _____ ______ relationship. An employment relationship is also indicated if the employer provides periodic or ongoing training.

EMPLOYER -EMPLOYEE RELATIONSHIP

Employee or Independent Contractor? (v.2) A) SUBJECT TO DISMISSAL, CAN QUIT WITHOUT LIBABILITY. B) A contract governs how the relationship can be severed. C) Works by the job. D) Work done personally. E) Permitted to employ assistants. F) Has a continuing relationship with the employer G) Works by the job.

Employee or Independent Contractor? (v.2) A) * EMPLOYEE* SUBJECT TO DISMISSAL, CAN QUIT WITHOUT LIBABILITY. B) *INDEPENDENT CONTRACTOR* A contract governs how the relationship can be severed. C) *INDEPENDENT CONTRACTOR* Works by the job. D) *EMPLOYEE* Work done personally. E) *INDEPENDENT CONTRACTOR* Permitted to employ assistants. F) *EMPLOYEE* Has a continuing relationship with the employer G)*INDEPENDENT CONTRACTOR* Works by the job.

For Independent Contractors _______ _______ such as Medicare tax and social security tax are not required by the employer and they provide the company with a ____ Number.

For Independent Contractors *WITHHOLDING TAXES* such as Medicare tax and social security tax are not required by the employer and they provide the company with a *TAXPAYER IDENTIFICATION NUMBER (TIN)* Number.

Form 1099-MISC States......... -A copy of this form must also be send to the ______.

Form 1099-MISC States *HOW MUCH THE CONTRACTOR WAS PAID FOR SERVICES RENDERED DURING THE PAST CALENDAR YEAR* -A copy of this form must also be sent to the IRS. (Internal Revenue Service)

A company's taxing and reporting requirements are minimal and much less costly for ______ _______ than they are for employees

INDEPENDENT CONTRACTORS

If a Form ____, ____ & a _____ Statement was filed for the worker or if the worker received _____ under the employer's benefit plans, the worker is classified as an employee.

If a Form *W-2* & a *WAGE AND TAX STATEMENT* was filed for the worker or if the worker received *BENEFITS* under the employer's benefit plans, the worker is classified as an employee.

In applying the common law test, IRS examiners must consider 3 categories: 1) 2) 3)

In applying the common law test, IRS examiners must consider 3 categories: 1) BEHAVIORAL CONTROL 2) FINANCIAL CONTROL 3)RELATIONSHIP OF THE PARTIES

It is the responsibility of the ______ to designate a worker's status as wither an employee or an independent contractor.

It is the responsibility of the *EMPLOYER* to designate a worker's status as wither an employee or an independent contractor.

If an individual is subject to the control of the company only as to what results are to be accomplished, and not as to the details by which those results are accomplished the individual is ______ an employee.

NOT

Under the ____ ____ ____, a worker is a common law employee if the employer has the right to control what work will be done and how that work will be done.

Under the *COMMON LAW TEST* a worker is a common law employee if the employer has the right to control what work will be done and how that work will be done.

Under the Internal Revenue Coe (IRC) Employers MUST withhold.....from their Employees' paychecks:

1) Federal Income Tax 2) Social Security Tax 3) Medicare Tax 4) State Income Tax 5) Local Income Tax

The relationship of the _______ is determined by examining how the work and employer perceive their relationship.

The relationship of the *PARTIES* is determined by examining how the work and employer perceive their relationship.

Employee or Independent Contractor? (v.3) A) Performs services under the worker's business name. B) Performs services under the company's name. C) Payment by the job, opportunity for profit and loss. D) Paid a salary, reimbursed for expenses, participates in company's fringe benefits programs. E) Furnishes own tools, equipment, and training, substantial investment by worker. F) Furnished tools, equipment, materials, and training. G) Controls the sales process and terms H) If an outside salesperson, company provides leads, sets terms and conditions of the sale, assigns a territory, and controls the sales process.

Employee or Independent Contractor? (v.3) A) *INDEPENDENT CONTRACTOR* Performs services under the worker's business name. B) *EMPLOYEE* Performs services under the company's name. C) *INDEPENDENT CONTRACTOR* Payment by the job, opportunity for profit and loss. D) *EMPLOYEE* Paid a salary, reimbursed for expenses, participates in company's fringe benefits programs. E) *INDEPENDENT CONTRACTOR* Furnishes own tools, equipment, and training, substantial investment by worker. F) *EMPLOYEE* Furnished tools, equipment, materials, and training. G) *INDEPENDENT CONTRACTOR* Controls the sales process and terms H) *EMPLOYEE* If an outside salesperson, company provides leads, sets terms and conditions of the sale, assigns a territory, and controls the sales process.

Employers MUST MAKE FEDERAL & STATE unemployment __________ Contributions on employees' behalf.

Employers MUST MAKE FEDERAL & STATE unemployment *INSURANCE* Contributions on employees' behalf.

Employers MUST MATCH the _______tax and ______tax payments of their employees.

Employers MUST MATCH the *SOCIAL SECURITY TAX* and *MEDICARE TAX PAYMENTS* of employees.

The primary way that an individual qualifies as an employee or independent contractor is the _______ ______ _______. However exceptions do allow a worker qualifying as an employee under the " " to be classified as an independent contractor when meeting the requirements of the reasonable basis test.

The primary way that an individual qualifies as an employee or independent contractor is the *COMMON LAW TEST*

The most significant evidence of financial control is whether the worker has the opportunity to ......

The most significant evidence of financial control is whether the worker has the opportunity to *MAKE A PROFIT OR SUFFER A LOSS*