Classifying Contract Workers Michigan

One of biggest impediments to small business growth is the difficulty of classifying workers as independent contractors instead of employees. This is essentially a tax issue. An independent contractor -- someone who does work for your company but is not a full employee -- is responsible for paying his/her own taxes. If that person were classified as an employee, you would be responsible for taxes. But the IRS has a long list of qualifications a worker must meet to be classified as an independent contractor, and often business owners and the IRS disagree about who qualifies. The IRS qualifications are listed here, along with some steps you can take to increase the likelihood of your workers qualifying as independent contractors.

Local Companies

Iverson Agency
313-961-2599
220 Bagley St
Detroit, MI
Theo Private Investigators
313-538-4090
18539 Ashton Ave
Detroit, MI
Council Detective & Security Agency Inc
313-372-9008
20041 Hoover St
Detroit, MI
Prudential Protective Services
313-592-1500
7800 W Outer DR
Detroit, MI
Mid-Michigan CEO Space
517-974-9943
465 N. Dietz Road
Webberville, MI
Cohen Coleman Investigation Inc
313-934-4172
5529 Webb St
Detroit, MI
Mack Investigative Services
313-535-9566
18691 Shaftsbury Ave
Detroit, MI
Second To None, Inc.
734-302-8400
3045 Miller Road
Ann Arbor, MI
Classic Investigative Agency
313-892-4634
20477 Van Dyke St
Detroit, MI
Wayne County Friend of The Court
313-224-0150
645 Griswold St
Detroit, MI



One of biggest impediments to small business growth is the difficulty of classifying workers as independent contractors instead of employees. This is essentially a tax issue. An independent contractor -- someone who does work for your company but is not a full employee -- is responsible for paying his/her own taxes. If that person were classified as an employee, you would be responsible for taxes. But the IRS has a long list of qualifications a worker must meet to be classified as an independent contractor, and often business owners and the IRS disagree about who qualifies. The IRS qualifications are listed here, along with some steps you can take to increase the likelihood of your workers qualifying as independent contractors.

The issue of control is central to the IRS' independent contractor evaluation. If you control how a worker completes a task for you, the IRS often regards your relationship with a worker as employer-employee. In order for someone to qualify as an independent contractor, the following conditions must exist:
  • The worker hires, supervises and pays his or her assistants

  • The worker is free to work when and for whom he or she chooses

  • The worker does the work at his or her own office or shop

  • The worker is paid by the job or receives a straight commission

  • The worker has the risk of profit or loss

  • The worker does work for several businesses at one time

  • The worker makes his or her services available to the general public (sometimes indicated by having business cards or a listing in the Yellow Pages)

  • The worker cannot be fired as long as he or she meets contract specifications

Some states have rules regarding independent contractors so check with your state's employment office before hiring. In addition, certain workers are automatically classified as employees, regardless of their work arrangement with you. Workers in this category include: full-time salespeople who sell goods for resale; full-time life insurance agents working mainly for one company; at-home workers who are supplied with material and given work performance specifications; and food and laundry delivery drivers.



To increase your chances of convincing the IRS that a worker is in fact an independent contractor, take the following steps:


  • State in your contracts that a worker is an independent contractor including a statement that all payments to the worker will be reported to the IRS on Form 1099.

  • Pay for work by the job, instead of by the hour, the week or the month.

  • Have all workers submit invoices for work before paying them.

  • State in all contracts with contract workers that the individual is responsible for his or her own insurance, including workers' compensation.

  • Construct a contract that allows the contract worker to use his or her own tools and equipment, and to hire his or her own assistants.

Featured Local Company

Iverson Agency

313-961-2599
220 Bagley St
Detroit, MI

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