Shop Talk: Practical answers for tough business questions
Question: I want to hire an assistant/bookkeeper to help me make sense of the papers that just keep stacking up on my desk. Can I hire a contract laborer so I don’t have to carry worker’s compensation insurance and pay payroll taxes?
Answer: I suggest you do an Internet search for “IRS Rule of 20.” You’ll find a list of 20 questions the Internal Revenue Service uses to determine if someone can be classified as an employee or an independent contractor. My guess is that, after you read the questions, you may well determine the person you want to hire would truly be an employee.
Another alternative would be to use an employee leasing company, so the person works for you but the leasing company covers all taxes and insurance. You pay a higher hourly wage, but usually you can hire the person directly (and reduce your costs) after an agreed-upon number of months. Another benefit is that if the person they send doesn’t work out, they’ll place another person until you find the right match.
First published in Vol. 27 No. 4 of Retailing Insight. © 2013 Continuity Publishing Inc. All rights reserved.