Independent Contractors Beware

Think you know all about being an independent contractor? Did you know the US government is cracking down on misclassified workers to help fill its coffers with millions of dollars in fines?

The San Jose Mercury News sheds light on the growing numbers of independent contractors at work in Silicon Valley, complex compliance issues for independent contractors, increased fines for corporations and tougher audits for contractors.

“Tech companies are nervously eyeing proposals in Washington to beef up enforcement and increase fines for violations of a complicated set of rules covering the use of independent contractors. The issue has special resonance in Silicon Valley, where thousands of engineers and programmers work as independent contractors for companies ranging from startups to some of the area’s tech giants.”

But the same issues apply to marketing and communications consultants, like those High Tech Connect represents. Anyone who wants to be a sole proprietor and start their own business providing services needs to understand the IRS has explicit rules about how you can work with your clients. Check out that IRS definition of Independent (Self-Employed) or Employee? here.

Intel said it uses “very few” independent contractors, preferring to hire employees. Cisco said it has “processes” in place to make sure its workers are “properly classified and managed in compliance with the policies set forth by the state and federal governments and their regulatory agencies.”

That’s one of the reasons companies like Cisco work with High Tech Connect to safely and legally employ independent contractors.

Ultimately, independent contractors are just as responsible for managing their business as a BUSINESS, and knowing how to operate within the laws and definitions is key to your success. Read the Merc’s article here.