Ways To Pay Independent Contractors
Making payments differ from employees to independent contractors. Initially the difference between the employees and the independent contractors must be deciphered. Independent contractors are those who work for a company on contract basis. They are independent business owners. Independent contractors will not be under direct monitor of the company. They are not employees as well. Contractor paymentsis done on hourly basis. Contractors are also paid based on the projects done by them.
Taxes, Benefits and payments: Contractor Payments are done based on the type of work done by them. The independent contractors are not employees of the company. No benefits and employee rights will be received by the independent contractors. The company will not pay social security taxes and Medicare taxes as well.
Steps before hiring independent contractors: The hiring company requires certain documents before hiring and paying independent contractors. The resume of the independent contractors and a written contract and Employee Identification number. The employee identification number will be similar to social security number for business. Employee identification number is essential even though there are no employees in the business.
Options for paying independent contractors: Based on the agreement between the contractor and the company the payment will be done. Some contractors get paid on the hourly basis. The other payment alternatives include payment done based on the work performed or by the job. The cleaning services will get paid as per the services offered. In the similar way the blogger will get paid as per the number of blog posts. The other alternatives include pay rates. Verbal agreement will be considered good as written agreement. But having written agreement will be best always.
Payment agreement terms: Apart from mentioning amount and pay type other important details must be included. The duration of the payment due must be decided.
Determining worker status: The status of the worker is determined by three major factors. Financial control involves the business aspects of the worker and the monitoring of the payer. This include the payment to the workers and whether the expenses are reimbursed. The control of the company related to the performance of the worker and monitoring how the worker does the job are determined by the behavioral role. Nature of the relationship involves written contract or employee benefits. Independent contractors are not employees of the company and the company will not pay tax on behalf of the independent contractors. The independent contractors have to pay the self employment tax on the total income earned from the self employment each year. Even during the general situations it is better to create a contract with the people working for you. The nature of relationship and the expectations can be deciphered easily through contract.