I find that contracts have a bad reputation, especially in stories. Ariel makes a contract with Ursula in Little Mermaid and loses her voice because of misplaced trust, a lowly farm girl makes a contract with Rumpelstiltskin and nearly loses her child because of unfair conditions, and car rental places won’t let me rent a car because I’m under 25. That last one is a bit of a stretch, but I know contracts are involved in car rentals! In any case, contracts can seem a bit sketchy at times, but they’re not all bad. Sometimes you need contractors to complete jobs that you might not have the time or skills to do. That’s where independent contractors come in.
If you have paid an independent contractor $600 or more in a given year, they must receive a 1099 by January 31st of the following year. If you start collecting W-9 forms from the contractors now, you can escape the hassle of scrambling to get the needed information come January. If you are confused on who might be an independent contractor, follow these guidelines: if a worker has control of their own hours and work, does work for other companies, and uses their own tools and equipment, they are most likely an independent contractor.
Make sure to take care of your contractors when they take care of you. If you don’t, you might end up with a curse or something.
If you have any questions on independent contractors or payroll, give us a call at Stapley Accounting!