The Independent Contractors And Their Tax Payments
The way the independent contractors get paid differ from the employees. An independent contractor are those who work for a concern on contract basis. An independent contractor will not be in direct control of the employer. The independent contractor will not enjoy the benefits of employees and has to pay the self employment tax. The company will not pay any tax including national insurance contributions and social security taxes. Independent contractors have to estimate the taxes on their own. Contractor Tax Calculator will be a great aid for the independent contractors.
Hiring and paying independent contractors: The employer before hiring and paying independent contractors seek certain documents from the independent contractors. The documents include the application or the resume, Employee ID number and a written contract. An Employee Identification number will be similar to social security number for business and is essential even if the business has no employees. Employee Identification number can be applied and can be received through online. It is always better to put everything in writing. Written agreement plays a major role in working process of independent contractors. It is important to write everything down. When everything is not in writing may lead to problems for the self employment workers. The important part of the agreement indicates that the worker is an independent contractor. The list of rights of the contractors and the services offered by them will be mentioned in the agreement.
Methods of paying independent contractors: After hiring the independent contractors the companies can pay as per the agreement. The independent contractors will get paid on hourly basis. The computer programmers may get paid for the hours they worked on the programming skills. The other payment alternatives include paying for the work done or by the job. The blogger will get paid for the number of blog posts created. The cleaning services may get their payment as per the services offered by them. Independent contractors are responsible for paying their income tax and self employment tax. Contractor Tax Calculator will enable the independent contractors to know the estimated amount to pay the tax. Depending upon the work done the independent contractors are paid by the project. The contractor is not an employee and will not get the employment benefits.
Independent contractors require w-9 form before beginning the work. The independent contractors has to offer the tax payer identification number to the hiring company. Independent contractors are considered as business owners. The independent contractors have to file the income tax returns and they can also deduct the business expenses. The independent contractors have to pay the self employment taxes on time. Filing the tax returns lately or inaccurate figures may lead to penalties.