Working as an independent contractor can provide flexibility and benefits not available to employees. Hiring independent contractors can potentially save an employer plenty on taxes and benefits. You may be able get the same productivity for less money and fewer administrative and cost issues. However, now more than ever before, independent contractors and the employers who utilize independent contractors need to make sure that their classification as such meets legal standards.
The IRS and Department of Labor (DOL) have hired new auditors for the 2010 tax year, whose sole purpose will be investigating potential mis-classifications. The result may mean many independent contractors being reclassified as employees in years to come. The resulting tax, wage and benefit payments may generate billions in revenue for the federal government.
Despite more audits, independent contracting should remain a viable way of conducting business for many. If you are already an independent contractor or are considering becoming one, you should consult with your tax and legal advisers to make sure you comply with the IRS and Department of Labor (DOL) classification standards.
In addition to their classification, independent contractors also need to be cognizant of retirement plan types and their features/benefits in order to meet their own needs. The Owners 401(k) plan is affordable with big company benefits while combining the benefits of a profit-sharing plan and a 401(k) without costly plan set-up charges. Owners 401(k) enables any one-person business to defer much more than might be possible under SEP-IRAs or SIMPLE 401(k), profit-sharing plans and other defined contribution plans. Independent contractors can save more for retirement, have complete contribution flexibility in any given year and there’s also a convenient loan feature available that may help prevent any early withdrawal penalties.
The Members Retirement Program is committed to keeping your costs low while delivering comprehensive service that helps to minimize the amount of your time needed to start and manage a plan. To learn more about the Members Retirement Program’s Owners 401(k) or other retirement plans, visit the AIA Trust website or call 800-523-1125, ext. 5985.