Josephine's Personnel Services, Inc.
Staffing Services
JPS, Inc. is an Equal Opportunity Employer.

JPS, Inc. provides staffing services in Silicon Valley, San Jose, Santa Clara County, Northern California, Southern California, Nationwide

1099 Independent Contractor – Misclassification & More

November 12th, 2013
Will you think twice before hiring a 1099 contractor?

Will you think twice before hiring a 1099 contractor?

In our last blog post, we introduced the basics of working with a 1099 independent contractor. In the final part of this two part blog series, we uncover the various risks associated with hiring 1099 contractors. While the concept of hiring 1099 independent contractors may seem initially appealing, it is vital to understand that it does not come without risks. The following are a handful of possible dangers that hiring managers and business owners should keep in mind when working with these contractors.

  • Misclassification: It is not unheard of for a 1099 independent contractor (that you have hired legally) to claim that you have misclassified them as a 1099 employee when they were actually a regular employee. Misclassification of contractors is a serious claim and could result in severe legal action or an IRS investigation.
  • Law Suits: As mentioned in the previous misclassification risk, a 1099 independent contractor could take legal action that could result in a hefty and costly law suit. This legal action typically regards various benefits, disability, insurance and workers compensation claims that wouldn’t otherwise be associated with a 1099 independent contractor.
  • IRS Audits: Audits will likely occur regularly. These audits will be carried out by government organizations varying from the IRS to the Department of Labor and many in between.
  • Additional Tax Payments: The tax payments associated with misclassifying an employee (intended or not) can really break the bank. If the IRS determines that a business owner is responsible for a misclassification, they may be held monetarily responsible for any and all paid and unpaid or withheld taxes with interest. It is also essential to understand that business owners can be held accountable for any unpaid taxes of a 1099 employee (even if they have not been misclassified).
  • Hefty Penalties & Fees: Misclassifying 1099 contractors can result in the payment of back wages or increasingly large sums of uncollected government fees.

Working with 1099 contractors is obviously a risky business, but do not fret; staffing agencies like JPS can help you avoid the multitude of misfortunes that could accompany this kind of employee. If you are seeking out quality temporary staffing solutions, we encourage you to contact the team at Josephine’s Professional Staffing today.

About Josephine’s Professional Staffing

Founded in 1988, Josephine’s Professional Staffing has nearly 25 years of business success and is continuously committed to providing superior quality staffing solutions to companies in the Bay Area. We proactively and consistently search for avenues to provide staffing solutions in the field of administrative, accounting, healthcare, light industrial, technical and professional services while taking pride in each of our employees. Josephine’s Professional Staffing is a Certified Small Business Enterprise (SBE), Underutilized Disadvantaged Business Enterprise (UDBE), and Minority Woman-Owned Business Enterprise (MWOBE). We can be reached at jps@jps-inc.com or 408.943.0111 and are located at 2158 Ringwood Avenue, San Jose, CA 95131.

Photo Credit: Victor 1558

1099 Contractors – Getting to Know the Basics

November 5th, 2013
Do you know the basics of 1099 contractors?

Do you know the basics of 1099 contractors?

Understanding the basics of 1099 contractors can be a daunting task. In this two part blog series, we briefly introduce the basics for understanding the concepts associated with 1099 contractors. Today, we will delve into the topic by answering basic questions pertaining to contractors, compensation and taxes.

What is it? A 1099 contractor is a specific type of worker that independently contracts his or her services to a business. 1099 contractors are often referred to as freelance employees and are used across multiple work sectors. The term ‘1099’ refers to the IRS form that a contractor will receive in regards to their rate of income during a specific tax/ fiscal year.

Compensation? A 1099 employee’s or independent contractor’s compensation is not based upon the typical hourly or minimum wage laws. Compensation is based upon the completion of pre-contracted tasks rather than the total hours of work performed. Independent contractors may receive wages below the minimum wage while other skilled contractors use their expertise to receive wages far beyond the minimum.

Taxes? As you can imagine, 1099 contractors who make a specific amount of income per year are issued 1099 tax forms from the business that contracted and compensated them. While both 1099 and regular employees have tax obligations regarding income and social security payments, regular employees do not have to make their own payments, as their withholdings are taken directly from regular paychecks. 1099 contractors are required to make their own tax payments in full.

This basic information will surely give any hiring manager or business owner an idea of what it means to hire a 1099 independent contractor. Be sure to check back next week for part two as we uncover the risks associated with hiring 1099 contractors.

About Josephine’s Professional Staffing

Founded in 1988, Josephine’s Professional Staffing has nearly 25 years of business success and is continuously committed to providing superior quality staffing solutions to companies in the Bay Area. We proactively and consistently search for avenues to provide staffing solutions in the field of administrative, accounting, healthcare, light industrial, technical and professional services while taking pride in each of our employees. Josephine’s Professional Staffing is a Certified Small Business Enterprise (SBE), Underutilized Disadvantaged Business Enterprise (UDBE), and Minority Woman-Owned Business Enterprise (MWOBE). We can be reached at jps@jps-inc.com or 408.943.0111 and are located at 2158 Ringwood Avenue, San Jose, CA 95131

Photo Credit: Victor1558