Question

If there is a possibility you may work with payroll or personnel, The General Ledger is a valuable tool that arrives each month in your email. The General Ledger The Complete Newsletter for Professional Bookkeepers each month will include updates of changes by state in payroll or personnel. It gives the latest percentages for deductions and other valuable information. The case below is from one of their editions. Read the court case and decision below. Do you agree? Research why you agree or disagree and write a detailed answer explaining your conclusion: “Employee or IC (Independent Contractor)? Although this case involves a worker who lived on-site, this factor had no effect on the ruling. In other words, this decision may affect your company or client. SDLL, an LLC that owned an apartment complex, took on a property manager for the apartments as an IC. He lived in a unit in the complex and was paid a fixed monthly amount, performing a range of work, including repairs and maintenance, interviewing applicants, and accepting rental applications.” The IRS audited SDLL and determined the property manager should be treated as an employee.” AIPB The General Ledger

Answer 1

There is no overall one-shoe-fits-all way to know if a worker is an independent contractor or employee. The IRS looks at each situation on a case-by-case basis. But there are some guidelines the IRS uses. You can use those guidelines to see how your workers might fit into one or the other category.

The IRS distinguishes between an independent contractor and an employee for the purpose of payroll taxes and withholding taxes. Basically, an independent contractor is an independent business person who runs his or her own business but who does work for another business. An employee is hired by a company to perform specific work at the direction of the employer.

To help distinguish between employees and independent contractors, the IRS has set up three general criteria:

Behavioral Control

If an employer trains and directs work, including hours of work, what tools or equipment to be used, specific tasks to be performed and how the work is to be done, the worker is likely an employee. If the worker can set his or her own hours and works with little or no direction or training, he or she is probably an independent contractor.

Financial Control

This factor includes how the worker is paid, whether the worker may work for others at the same time, and whether the worker can incur a profit or loss. A worker who is paid a salary is restricted from working for others, and who does not participate in company profits or losses, is probably an employee.

Type of Relationship

The presence of a specific contract may indicate an independent contractor, but this factor alone is not controlling. If the worker is entitled to benefits, this would indicate an employment relationship. Another factor would be the type of work the person does; if it is directly related to the company's core work, he or she is probably an employee. For example, a maintenance worker would not be doing 'company' work if he or she were working for a bank.

Conclusion

From the above research we can conclude on basis of above points

A- Behavioral control :- from this we can conclude he is employee because he works like an employee and performs works only to employer

B- Financial Control :- as he get fixed remuneration so it would be treated as employee

C- Type of relationship :- from this point he is Independent contractor but this sole factor is not sufficient to prove him as a IC

So in last when their is contradictory point like above IRS may decide him to be as employee