Tips & Information
Employees vs. Independent Contractors
It's crucial to know whether your workers are employees or independent contractors. Big dollars may be at stake in the form of Federal and State assessed penalties resulting from misclassification. The validity of your company's pension plan may also be at stake.
A periodic review of the status of your
workers to see if they are properly classified
but the process
isn't easy due to the
complexity of the issue.
“common law” rules,
a worker generally is
an employee if the
employer has the
right to control and
direct the worker regarding
the job he is
to do and how he is to do it. The IRS
usually applies 20 common law factors
to see if the employer has that right.
There is no litmus test for exactly how
many factors must be satisfied, nor are
the factors uniformly applied.
If you'd like to discuss these complex
rules with us and see how they apply to
your business in order to make sure that
none of your workers are misclassified,
please call our office to arrange for an
To Lease or Not to Lease
With lease prices becoming increasingly
attractive, many individuals
are wondering if it is indeed
advantageous to go that route.
The decision to lease or buy a vehicle depends on the
terms of the lease as well as the particular circumstances
of the individual.
Leasing may be advantageous if you trade cars
every few years and borrow the money to do so. Since
leasing provides more car for less money, this may be
the way to go if you want a high-priced vehicle. Leasing
also can provide a business owner with more cash flow
since monthly lease payments on comparable cars are
generally about one-third less than loan payments.
You probably want to consider purchasing the car if
you intend to keep it for a long period of time or plan to
drive more than 15,000 miles per year. Most lease contracts
include a hefty additional charge for every mile
driven over the limit. Also, purchasing a vehicle can
generate a larger initial write off if the car is not subject
to “Luxury Auto” rules for depreciation.
After making a decision to lease, be sure to negotiate
the purchase price that the leasing company uses to
calculate the lease payments and read the lease contract
carefully to avoid hidden costs and penalties. Finally,
comparison-shop to get the best deal available.
Place Family on the Payroll
Hiring your children will not only provide them with
spending money, but your business will obtain a deduction
for their wages as well. If your business operates
as a sole proprietorship or parent-owned partnership,
FICA and federal unemployment taxes need not
be paid if your child is under age 18 and 21, respectively.
If you have a legitimate job offering, consider placing
your spouse on the payroll. His or her wages are
exempt from federal unemployment taxes, and he or
she will be able to earn Social Security credits for the
If your spouse is a bona fide employee and you are
covered under your spouse’s health insurance policy,
the expense of providing the plan is deductible as a
business expense. Since other employees may have
to be covered under the plan, this may be too costly if
you have eligible employees besides your spouse.