human resources small business tax, accounting & finance

Who Me? Avoid These Employment Traps

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How are you hiring and paying for services your business needs? Do you have employees? Independent contractors? Contractors or consultants? Interns?

Tax and labor laws contain a lot of traps if you do not pay attention to what you are doing when you bring in the help you need. Workers Compensation insurers and VA’s Unemployment Insurance rules also must be followed. Often small organizations and solopreneurs hire extra help or expertise on an ‘as needed’ basis. But you do need to be clear about the ‘how’ and ‘which’ among your options.

Want to hire a consultant, contractor, or independent service provider?
If you hire via a company which provides such services, it is usually a nice clean transaction – business to business. When you work with and pay an individual directly, you need to be sure to keep it legal. Check out this IRS guidance  on hiring of independent contractors versus employees.

Be sure the help you hire, no matter what you or they call themselves, is working with you to ensure both of you are in the clear legally on your payments to them.

Want to hire an intern?
Lots of small organizations think of interns as free help. Not so! I see organizations all the time that want an unpaid intern to work for them but violate these rules – and get into trouble. Back pay, taxes, and fines are not fun to deal with! If you are legally a non-profit, you may be able to hire an intern without paying the person. All others – very unlikely. See this DOL guidance.

Do you have employees?
The federal and state governments are cracking down on proper payment of employees. Both are looking at whether employees are properly classified in relation to wages or the organization is trying to call them independent contractors when they are employees. They are checking out pay for overtime work and whether the organization is trying to treat employees as exempt from overtime laws when the work done is actually not exempt. Need more info?

Got questions?  Your CPA, HR advisor, or attorney can help.

Patricia A. Frame is an experienced management consultant, HR executive, speaker, and author on human capital issues. She is known for her ability to address organizational goals and issues effectively and to create human resource management practices which support these goals without excessive administrivia. Patricia has advised executives and boards on a wide range of human capital and strategic planning issues. She has expertise in organization development, talent management, process restructuring, compensation, and training. She has worked with technology-based companies, government contractors, non-profits, associations, and retail operations. She advises small to mid-size organizations on ways to succeed and to help their employees thrive. Ms. Frame has given seminars for SBDC in recent years on the basic processes of HR management. Additionally, she generously provides one-to-one HR counseling once a month through Alexandria SBDC.

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