Dayspa

SEP 2017

DAYSPA is the business resource for spa & wellness professionals! Each issue covers the latest in skin care, spa treatments, wellness services and management strategies.

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dayspamagazine.com • september 2017 • [ 81 ] It all sounds straightforward enough, but of course it isn't. A 2009 report by the U.S. Government Accountability Offi ce (GAO) found that there may be as many as 3.4 million workers improperly classifi ed as ICs. In fact, improper worker classifi cation by employers has cost the government billions of dollars in revenue. And that's why you need to be clear on what you can and can't do as an employer in determining your workers' statuses. The penalties for misclassifying employees are stiff . If you improperly classify an employee as an IC, you will pay the government $50 for each W-2 form that you failed to fi le. That may not sound like much, but say you failed to withhold income taxes for an employee, you must also pay a penalty of 1.5 percent of the employee's wages, 40 percent of the FICA taxes that should have been withheld, and 100 percent of your share of FICA. There's also a 0.5 percent penalty for unpaid tax liabilities per month up to 25 percent of the total tax liability. In addition to these, there are also monetary penalties for the failure to fi le and withhold state payroll taxes, which can mount up quickly. Just to make sure no stone is left unturned, auditors can be sent to your business to perform detailed examinations of your payroll records and ledgers. It's still up to you to decide how to classify your workers. Before you opt for employee or IC for a particular individual, consider the degree of control you wish to have over that person in three major areas: behavioral, fi nancial and type of working relationship. Behavioral Control According to the IRS, a number of factors ultimately determine how much control you will have over your workers' behavior. Type of instructions given. These instructions may include: ■ When and where to do the work ■ Which tools or equipment to use ■ Which workers to hire or to assist with the work ■ Where to purchase supplies and services ■ What work must be performed by a specifi ed individual ■ What order or sequence to follow when performing the work If the employer gives the worker most of these instructions, the employer is exercising a degree of control associated with a worker classifi ed as an employee. Conversely, if an individual worker can make all these decisions on their own, it mitigates in favor of the worker being classifi ed as an IC. Degree of instruction. Simply put, the more detailed the instructions an employer gives a worker, the more control dayspamagazine.com/freeinfo

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