It is essential that business owners correctly determine whether the individuals providing services are employees or independent contractors. Basically, you must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. You do not generally have to withhold or pay any taxes on payments to independent contractors. Before you can determine how to treat payments you make for services, you must first know

If you are in business, whether self-employed or running a company, you must send a 1099 form (with copies to the IRS) to anyone that you pay money to, unless the payments meet one or more of the following exceptions: - The recipient is a corporation. - You included the payment in a W-2 form (to an employee). - The payment is for a tangible product (office supplies, computers, etc). - The total payments during the calendar year were less than $600. To make sure that you are

Knowing where you fall matters a lot when it comes to filing your taxes. Specifically, if you’re an employee , the company you’re working for is responsible for withholding taxes throughout the year, as well as costs like the employer’s share of Social Security and unemployment taxes. If you’re an independent contractor , you’ll need to be paying quarterly taxes and will be fully responsible for those additional tax costs. It's not as easy as just looking at how many hours y