People keep treating independent contractors like employees and it's gonna bite them

I run a small crew doing painting jobs and I keep seeing guys get blindsided by the IRS because they misclassify workers. Just last month a buddy of mine got hit with a $12k fine because he was controlling when his subs showed up, what tools they used, and paying them hourly. That's not a contractor, that's an employee. The rule is pretty simple - if you tell them how to do the job, when to work, and provide all the gear, you're their boss. But I see small business owners in our local networking group doing this constantly because it's easier to pay someone cash and call it a day. Has anyone here actually been audited over this and what happened?

2 comments

2 Comments

reesel509d ago

Not really though, calling them contractors gives everyone more freedom and keeps the IRS out of your business as long as you're smart about it. Plenty of painters run their own gigs with their own tools and set their own hours, so if a guy shows up with his own sprayer and handles his schedule fine, why treat him like a payroll slave? The buddy you mentioned probably got caught because he was being too obvious about it, not because the system itself is broken. Smaller crews use subs all the time without issues because they treat them like actual independent businesses instead of just hourly help.

martinez.kim9d ago

I dunno man, if they're using your paint, your schedule, and your clients then the IRS is gonna see right through that "independence" real quick... my cousin got nailed hard for that exact setup even though he thought he was being careful.