Parceling out work to subcontractors can save your construction company time, money and headaches.
But there are considerable accounting and tax implications. And you cannot treat all workers as independent contractors.
Let’s say you decide to hire an independent contractor and the IRS reclassifies the person as an employee. Your company can be hit with a tax bill for unpaid taxes, interest and penalties. You might also be liable for state taxes, unemployment taxes and employee benefits.
The issue is complicated because the IRS looks at many factors in making a determination. Contact us for help. Our professionals can help you avoid costly problems by setting up independent contractor agreements properly at the start of jobs.