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ARTICLE | May 21, 2012

Family Business: 10 Tips for Managing a Parent-Adult Child Business

A mother and her daughter, who will graduate in May from college, share ownership of a new Home Instead Senior Care franchise business, a partnership that seems tailor-made for these economic times. More college graduates are having a difficult time finding jobs, according to the U.S. Bureau of Labor Statistics. Teaming with a family member has proven successful. According to the U.S. Small Business Administration, family-owned businesses account for 90 percent of all businesses in the U.S. (large and small) and continue to be a powerful force. And senior care franchising is one way to help new graduates get their careers off the ground. 
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NEWS | May 18, 2012

Is Starting a Franchise From Home For You?

Fox Small Business Center offers tips and expertise on running a home-based franchise business.
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SECTOR REPORT | April 26, 2012

Senior Care Franchise Report 2012

Franchise Business Review's special report Senior Care Franchises offers a high-level look at the senior care/home care franchising sector. We explore what services the sector provides, what’s involved from an investment standpoint, what the “typical” franchisee looks like, and how franchisee satisfaction in the sector has fared in the past year. We also identify the top senior care franchises based on our franchisee satisfaction research.
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ASK FBR | March 19, 2012

How long have you been researching a franchise opportunity?

Franchise Business Review wants to know what you're doing in order to find that right "fit", and encourages all those interested in starting their own franchise to answer this simple question - how long have you been researching a franchise opportunity? (Click here to share) 
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Home > Blogs

Should You Hire Employees or Independent Contractors?

by Warren Jones

Among the many considerations to weigh when shopping for a franchise is whether you will need to hire workers to provide services to the business. Further, depending on the franchise requirements, you may be required to hire a specific classification of worker, namely, employees or independent contractors.

As a business owner, it is essential that you understand the difference between the two for a variety of reasons, each of which can significantly impact your bottom line.

The IRS sets forth rules to help you determine the correct classification of anyone you hire. This will affect how much you pay in taxes, whether you need to withhold from your workers’ paychecks, and what tax documents you need to file.

Generally, hiring an employee means you must withhold and pay income taxes, Social Security and Medicare taxes, and unemployment tax on those wages. With an independent contractor, you do not have to withhold or pay any taxes on their earnings.

In determining whether a worker is an independent contractor or an employee, the IRS begins with examining various aspects of control or direction of the work in one of three general categories: behavioral control; financial control; and type of relationship.

If you misclassify workers as independent contractors, you can end up with substantial tax bills. Additionally, you can face interest and penalties for failing to pay employment taxes and for failing to file required tax forms. To learn more about this topic, go to www.IRS.gov, then select the Small Business link.

Another important aspect to consider when deciding what type of worker to hire relates to liability while they are working on any aspect of your business. This includes work-related injuries, injury to another person (such as in a motor vehicle accident), property damage, or theft.

If you have employees, you are required to pay worker’s compensation and other insurances to cover your liability. However, while you are typically not responsible for paying for insurance to cover an independent contractor, you are responsible for making certain that they carry their own insurance.

If a contractor does not have insurance and is injured or causes injury to another while carrying out work related to your business, you can be held liable, regardless of your relationship to the worker (employee or independent contractor). You can overcome that obstacle by paying worker’s compensation and/or other types of insurance for your independent contractors.

Consult with your CPA and/or attorney to ensure you understand and abide by the various guidelines with regard to any workers you hire.

Warren Jones, CPA
CFO
Bark Busters USA

Learn more about Bark Busters at topfranchises.franchisebusinessreview.com.

 

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Posted by shiela bigg on 01:16:51 AM on August 26, 2011

Job growth in the U.S. has not been recovering very quickly. Unemployed individuals are turning to alternative employment options. Independent contractors are being employed more and more often to fill jobs that employees used to do. Understanding the difference between independent contractor and employee could have huge tax consequences. Article source: Making the distinction; employee vs independent contractor IRS. From a legal standpoint, whether an individual is an independent contractor or an employee has tax ramifications. The Internal Revenue Service has guidelines that are intended to clarify the difference, partly to avoid confusion and partly to guard against illegal practices such as listing employees as independents.

Posted by shiela bigg on 01:14:19 AM on August 26, 2011

For individuals, the differences in working as an employee and working as an independent contractor mostly involve paperwork and personal responsibility. When you are an employee, the employer is responsible for paying part of your payroll taxes. An employer also has more say about work hours, work process and is responsible for providing the tools to get a job done. An independent contractor is responsible for paying all of their employment taxes and has more individual control over their work process.