The federal tax deadline is rapidly approaching and small businesses owners are already compiling their payroll
information. However, one detail entrepreneurs should be very cognisant of is how they classify their employees. Starting this year, with the possible implementation of the Employee Misclassification Prevention Act, small business owners could be heavily penalized for incorrectly classifying full-time staff as contractors or temporary help.
The act falls under the Fair Labor Standards Act and stipulates that business owners properly classify workers because independent contractors often provide tax advantages for entrepreneurs.
According to Elaina Smiley of Meyer, Unkovic & Scott, those who improperly file contractors, part-time help or other independent operators could face financial penalties, retroactive liability, liquidated damages for attorney fees, workers' compensation errors, issues with benefits compensation and assuming responsibility for self-insuring benefits.
With the federal government in dire need of funding, the Internal Revenue Service may be on the look for any erroneous classifications. To ensure one's business taxes are done thoroughly and without error, entrepreneurs may want to consider hiring a secure, outsourced payroll processing service
to complete all payroll needs.
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