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How do you pay an independent contractor?
I'm currently an independent contractor working for a company. I get checks from them regularly without tax taken out. At the end of the year they send me a tax stub for the to do my own taxes. I'm interested in forming a small company (outside the field I work) and employ independent contractors in that specific field. How do I go about doing this? What information do I need from them? How do I do the taxes on my side of this? Do I write off the checks I send to my employees as expenses?
Public Comments
- How do I go about doing this? >From a tax standpoint, you can go into business very easily as a sole proprietor. Once you have the intent to be in business, you are in business. Keep track of all your income and expenses, including mileage (58.5 cents/mile now). If you have a profit, you will have to pay both income tax and social security tax on it. If you have a loss, it will lower your taxable income. If you want to be a corporation, partnership, or LLC, there are MANY MORE considerations. What information do I need from them? >Form W-9 from IRS website. How do I do the taxes on my side of this? >See above. Do I write off the checks I send to my employees as expenses? > Yes, of course, it is one of many expenses that you can deduct. This question cannot be answered completely in this forum. As always, consult with a tax professional for specific answers. CPAGreg-glindatax.com
