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Where e-filing information return forms comes full circle. We support 1099, 1098, W-2, and Affordable Care Act forms.

hiring independent contractor

The Versatility of 1099-NEC Deductions

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There are several ways to take advantage of 1099-NEC deductions, and they’re not all related to independent contractor work. Let’s discuss the various deductions that can be recorded on Form 1099-NEC. The Main Deduction: Non-Employee Compensation 1099-NEC was recently reinstated in the tax code and process to differentiate non-employee compensation more clearly. If our business paid an independent contractor or freelancer more than $600 during the tax year, you have to give the correct W-9 information to those non-employees so they can use them for their 1099-NEC deductions and reporting. If you are an independent contractor or business that was paid for the work and you are using the 1099-NEC to report your earnings to the IRS, you may also be eligible for the qualified business income deduction. This deduction allows you to take a 20% deduction on pass-through income. Breaking Down Non-Employee Examples Often, when we mention freelancers or independent contractors, a few specific businesses or individuals come to mind: freelance photographers, writers, marketers, and the like, or contractors that include those in the construction or consulting fields. While all of these roles can describe the people you paid for labor who weren’t direct employees of your business, that’s just the tip of the iceberg for 1099-NEC deductions and business relationships. Types of Businesses, Products, and Services Eligible as Non-Employee Compensation Non-employee compensation is used for tax purposes to classify any wages or payments made to those who did work for you or your business – either for a specified temporary basis or for a defined project. Non-employees are typically independent contractors, freelancers, sole proprietors, and self-employed individuals. These can be creative or marketing consultants or freelancers. Some examples of this include things like: Paying a copywriter or editor for their work on monthly blog articles posted to your website …

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Best Practices for Working with Independent Contractors

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Just like hiring a new employee, there are tons of best practices when it comes to working with independent contractors. Here are some of our favorites. First Thing’s First: Paperwork You know the feeling when you are thinking about something you have to do, but you’re in bed or somewhere inconvenient, so you tell yourself, “I’ll remember, I don’t need to write it down"? We all know it’s not true, right? That’s the same feeling you should get when it comes to requesting paperwork from independent contractors. Always do it first, so you (and they) don’t forget! Before any work is started or agreements signed, you’ll want to give your independent contractor a Form W-9 and have them fill it out and return it. W-9s are for your records and they help you with filing your taxes later. Once you have that settled, you can start negotiations, contracts, or any other agreement you are looking to create. Establish Communication Expectations and Boundaries This one goes both ways. Because the nature of an independent contractor relationship can range from short-term or temporary to long-term and near-permanent, it’s important to set boundaries for when and how you are going to communicate with each other. This includes discussing which days and times work best for phone calls, emails, texts, etc., as well as which communication medium you would like for specific things like project updates, discussion of issues, or amendments to the original project. Do you want weekly updates? Daily? Would you like to set up meetings after each project phase is complete? The more you offer upfront, the easier it is to work through any issues that may arise later. Boundaries are also important. If your independent contractor doesn’t work weekends or is going on vacation during your time together, those things need to be respected. If you anticipate lots of “off the clock” questions, discuss with the contractor what medium or communication method will work best to catalog …

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