Tuesday, July 8, 2014

As posted before on the blog, there are a lot of different factors used to determine for tax and for liability issues whether a person is a 1099 or a w-2 employee--some key factors for compounding sales or marketing reps might be does the company supply you a vehicle and gas for that vehicle, a company credit card, a laptop or ipad, a company phone, health benefits, allowing you to contribute to the company retirement planm prevent you from selling compounds of other pharmacies, etc. Neither the employer or the sales or marketing representative want to get this one wrong because of the risk of penalties and interest.

1099 vs. W-2: How Independent Contractors and Employees Differ

Posted
If you’re an independent contractor, you likely:
  • Set your own schedule.
  • Use your own personal method for finishing assignments.
  • Accept tasks on a case-by-case basis—and can turn down offers of work.
  • Supply your own tools.
  • Have more than one client.
Basically, if you do your job well and finish it on time, the company usually doesn’t have much contact with you while you’re working.
If you’re an employee, you likely:
  • Have assigned hours or a set schedule.
  • Get trained by the company in a certain method.
  • Complete any and all work assigned to you by a manager.
  • Are provided the tools and materials necessary to finish your work.
  • Have only one employer.
Compared to contractors, employees usually have relatively little control over their own work—but they do generally have stability and benefits, with one of the most important ones being health care.
Contractors, however, are totally on their own when it comes to benefits, but there’s one plus for this group come tax time: If you supply your own tools and materials, you’re able to deduct those expenses, says Campbell. That laptop and cushy office chair you just bought? Both deductible.
“You also have the right to deduct certain expenses if you’re a W-2 employee, but the restrictions are much higher,” says Campbell.

Think You’re Being Misclassified?

If you feel like your own job falls somewhere between contractor and employee, you’re not alone. In fact, it’s part of the reason why so many businesses think they can get away with misclassifying employees as contractors. According to The Wall Street Journal, state studies have shown that local businesses misclassify 10% to 60% of employees as independent contractors.
“Just violating one of the rules probably won’t boot you into the other category,” says Campbell. “It’s when you violate enough of them that you should probably be reclassified as a W-2 employee.”
If you feel like your client is exerting too much control over your workflow for you to be properly considered a contractor, Campbell says that it’s important to act. While you might not feel comfortable bringing it up, she says, “the company is at risk for penalties and fines if the state does a 1099 audit and determines that you’re really an employee.”
Campbell suggests reaching out to both your client’s HR department and the manager handling your work. “Explain that you’ve been giving up control over your workflow, and you’re not receiving anything in return, like benefits,” says Campbell.
RELATED: Why I Gave Up Job Security to Go Freelance
Then the company will generally have two options: Either they’ll have to release control, increasing your freedom over your work and schedule, or they’ll have to reclassify you as an employee and start providing you with the benefits, tools and infrastructure due to employees.

quoted from here

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