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As your business grows, you are going to need help. This help comes in the form of employees and independent contractors. What you can write-off is dependent upon how your helper is classified - as an employee or independent contractor.

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A week's pay is calculated according to the type of work done. Workers on fixed hours and pay should be paid a normal week's, while workers on variable pay (including output workers) should be paid their average hourly rate multiplied by their normal working hours calculated over a 12 week period. Shift workers should be paid their average weekly hours over the preceding 12 weeks multiplied by their average hourly rate.

Internet Business Opportunity Whenever possible, you want to use independent contractors to assist you. Payments to independent contractors are completely deductible. You simply claim the deduction on your return. If you pay them more than $600 during the tax year, you also must issue a 1099-MISC in January of the following year. Importantly, you do not have to pay employment taxes or make withholding on the compensation.

arrow Guides Growing Your Business Staff Issues Financial Issues Company Structure Tax & VAT Business Protection Online Business Overseas Magazine Business News 24 March 2006 The national minimum wage Nearly everyone who works for you will be entitled to at least the National Minimum Wage (NMW). It is a legal right and you have to pay it. Agency and casual workers, timers and piece workers, (including homeworkers) employed are all included. Even if workers do not have a contract they are still entitled, and the average pay of workers for their actual pay periods must not fall below the NMW. There are some exemptions, however, and the rates will change in October 2006.

Free Money Unfortunately, the IRS doesn't allow you to randomly classify a worker as an independent contractor. The key to the determination is whether you "control" the actions of the worker. Generally, you must be able to show the IRS that the worker is an independent contractor because they have the ability to control the details and means by which the work is accomplished. To this end, it is helpful to show the worker sets their own ours, has a work place and risks not getting paid if the work is below standard.

arrow Guides Growing Your Business Staff Issues Financial Issues Company Structure Tax & VAT Business Protection Online Business Overseas Magazine Business News 24 March 2006 time workers. time workers must enjoy, rata, equal terms and conditions. This includes rates of pay, holiday entitlement, sick pay, maternity and parental leave, access to training and career development and company pension schemes, amongst other things. time workers, workers, who tend to be parents and work during term time and take unpaid leave during the school holidays, or temporary workers, whether hired on fixed term contracts or not.

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Free Online Affiliate Program If your worker is classified as an employee, the tax burden increases. Under federal law, you are responsible for paying employment taxes related to the worker, even if there is only one.

All workers are entitled to paid leave under the Working Time Regulations 1998. Workers, time, time, are entitled to a minimum of four weeks paid leave a year, pro rata. Workers who work five days a week will get 20 days, workers who work thee days a week are entitled to 12 days paid holiday (3 x 4).

Auction Coin Money Paper Initially, you must withhold FICA, Social Security and income taxes from employee paychecks. As an employer, you must also contribute FUTA payments on your own, to wit, they are not deducted from the employees pay.

Franchise Business Opportunity FICA stands for the Federal Insurance Contribution Act. This Act created a system to collect and provide benefits for workers who retire, are injured or become disabled. FICA is better known as Medicare.

Best Free Online Affiliate FUTA stands for the Federal Unemployment Tax Act. This Act created a system to provide unemployed workers with temporary benefits until they obtain a new job. The system works in tandem with state unemployment acts. Most consider it a disaster, but you still have to pay.

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Best Home Based Business As you can see, it is cheaper to use independent contractors versus employees. The tax burden is significantly less, but make sure the IRS doesn't reclassify them as employees.

Affiliate Marketing Program Richard Chapo is CEO of Business Tax Recovery - Obtaining tax refunds for small businesses for overpaid taxes. Discovery tax strategies and deductions in our tax articles section.

Money Site Thebillivard Com Rick Chapo is with Nomad Journals - makers of writing journals. He is also with BusinessTaxRecovery.com - information on taxes.

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