Hiring of Contractors

First, you need to determine whether the person or persons you are hiring should be classified as employees or independent contractors. Luckily the Internal Revenue Service recently issued a fact sheet titled “Employment Taxes and Classifying Workers” (FS-2007-27). This fact sheet provides guidance on whether a worker should be classified as an independent contractor or an employee. FS-2007-27 can be found at http://www.irs.gov/newsroom/article/0,,id=177092,00.html

Once you determine that an individual should be classified as an independent contractor you should have them fill out a W-9 form. The W-9 is kept on file by the employer.

Finally, at the end of each year the employer is required to file a form 1099-Misc for each independent contractor (exceptions apply).

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William B. Riccio, CPA/CITP is a certified public accountant. He is president of Riccio & Associates and can be reached at (216) 255-6913 or by e-mail at william@ohiocpa.net.