Many businesses outsource tasks to individuals who are not employees. While it can be a great boon to businesses and increase overall efficiency, many businesses find themselves in legal difficulties when they unwittingly or knowingly abuse the use of outsourced workers. For businesses considering the use of independent contractors, an Orange County business attorney can provide suggestions on how to avoid such pitfalls.
What Are Independent Contractors?
Independent contractors by definition work for themselves. They accept work from a business and get paid but do not legally become employees. As such, they do not receive health benefits, sick or vacation time, and cannot collect workers’ compensation if they become injured. The business does not withhold income tax from them, but it is required to provide them with IRS form 1099 after the beginning of the year. An Orange County business attorney can assist with working independent contractors into a business plan.
Advantages for a Business
The advantages of using independent contractors may be to some extent self-evident to a business owner. Workers’ compensation insurance does not need to be carried for the individual, and bookkeeping/payroll matters are much easier. The business also retains great flexibility in what manner and how often to use the services of these individuals. Independent contractors may be used as often or little as the workload dictates.
Generally the independent contractor works outside the facility at his own pace, so materials and facility requirements are avoided. Hiring, firing, and potential related legal issues do not pertain to these workers, either. Generally, the contractor simply signs a contract outlining the expectations. Either side may cancel this contract at any time.
Potential Pitfalls
It is essential to work with anOrangeCountybusiness attorney from the outset if you plan to use independent contractors. This is because misuse of these workers can lead to serious legal consequences. Businesses may temporarily augment their workforce with these contractors, but using too many, or using them in place of or as replacements of employees is illegal. The IRS watches businesses’ use of independent contractors and may impose harsh penalties in situations of misuse.
For More Information
If you believe that using independent contractors may benefit your business, work with an Orange County business attorney. Call Daily Aljian LLP for a consultation at (949) 861-2524.