One of the most important questions you have to answer as your small business grows is how to pick up the slack when you can’t do it all. Whether you should bring on an employee or hire a contractor is the issue that the Intuit Small Business Blog looked at last week.
As Intuit points out, the IRS can nail you if you put workers into the wrong category. The article points out three specific areas that determine classification:
1. Behavioral control – including issues like training, instruction, and oversight.
2. Financial control – such as whether the worker has to make a significant investment in order to work.
3. Relationship. The perceived relationship, as well as the written contract, go a long way toward defining which classification a worker ought to be in.