You want to make videos. Yet, to be a video business, you need to manage a lot of other aspects, particularly taxes. I know you didn’t get into this work because of the taxes. So why are you pulling out your hair over it? Today’s guest on this special Facebook Live recording explains how to make sense of it all.
Generally speaking, an employee is someone who works for you long-term whereas contractors tend to be temporary. You have more control over how employees do their work than you do with contractors.
About Jeremy Doorn
As a ten-year-plus employee of Core Wealth Management, Jeremy Doorn helps small businesses do a better job of tax planning. In addition to firm administration, he handles business advisory services and business succession planning for his clients.
The Subtle and Not So Subtle Distinctions Between W-2s and 1099s
Jeremy explains why it’s crucial to classify people who work for you correctly. Understanding the difference between a contractor and an employee is essential. If you get caught misclassifying them, it will come back to bite you.
While there are subtle differences, generally speaking, an employee is someone who works for you on a permanent basis doing a variety of tasks. A contractor is someone who is hired on to do a specific, often temporary, job. Jeremy describes what to consider when classifying these people so that you don’t end up paying hefty penalties that could threaten your business.
Just Do the Right Thing
Jeremy stresses that it’s always best to just do the right thing. Don’t misclassify the people who work for you just to save some money. Not only is this dishonest, but it could land you in a whole heap of trouble.
When things look fishy to the IRS, an audit will likely follow. Although the risk on an audit is generally low, the risk just isn’t worth it. Jeremy repeatedly emphasizes that trying to save a little money now, could end up being very expensive in the end.
Have you had trouble classifying people who work for you? Do you prefer to work with employees or contractors? Why? Leave a comment below!