To this day, many businesses both large and small struggle with the question “Are they an employee or a subcontractor? Do I issue them a W-2 or a 1099?” Does this sound familiar?
It’s the beginning of a new year and we are thinking about taxes, W-2s and 1099s and I’m sure like most companies the subject of W-2s vs. 1099s comes up every year. Your next thought may be “Oh well, I’m a small business, they won’t bother me.” Trust me, this could not farther from the truth.
Recently, a local small business owner who had similar situation and ended up paying the penalties or fighting it at an Unemployment Insurance Hearing. The penalties and interest you could be charged for misclassification can be very steep. The state may also look to collect workers’ compensation and unemployment premiums for unreported wages.
If you are unsure or have any questions, please contact the Human Resources team at Custom Accounting Services today.