As your business grows you may start asking yourself if you should hire full or part-time employees, or hire subcontractors to perform specific jobs on an as-needed basis. If you hire contract labor, your paperwork is much easier. However, just calling someone contract labor doesn’t make him/her so. If you incorrectly classify those working for you, you may end up paying substantial penalties and back taxes to the IRS and the State of Colorado.
Most individuals who work for you will be considered either common law employees or independent contractors. Unfortunately, there are many state and federal laws that are used to define an employment relationship and to determine whether an individual who performs services for you is an “employee” or an “independent contractor.” Publication 15-A, “Employer’s Supplemental Tax Guide,” has more information on determining whether an individual is an independent contractor or an employee.
Colorado Business Development Foundation
info@coloradobdf.org
www.coloradobdf.org
Small Business Navigator Hotline: 303-592-5920
© 2022 Colorado Business Development Foundation. All rights reserved.
All information within this resource book and website is for informational purposes only and is not intended to be legal, tax, business or other professional advice. It is current to the best of our knowledge as of the date of publication. You should contact an appropriate professional to discuss any issue particular to you or your business and only rely upon your own research into those issues. Use of and access to this resource book or the associated website does not create any relationship between the publisher, authors, and the reader, or any other individual or entity. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAWS, THE MATERIALS AND INFORMATION IN THIS RESOURCE BOOK AND WEBSITE ARE DISTRIBUTED ON AN "AS IS" BASIS WITHOUT WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.