Hiring Independent On Site Building Contractors If you hire  Independent Contractor (ICs), you must think that, sooner or later, the  government agencies will audit you and that they will question the status of workers you’ve classified as ICs. Long before you’re audited, you should have in your files all the information and documentation you need to prove that a worker is an IC. Don’t wait until you’re audited to start thinking about how to prove a worker is an IC; by then it may be too late. A. Before Hiring an IC Someone in your company should be in charge of: ·    interviewing prospective ICs ·    determining whether applicants qualify as ICs ·    authorizing workers to be hired as ICs, and ·    preparing an IC data file containing the information and documentation you’ll need to prove the worker is an IC if you’re   audited. 1. Interviewing Prospective ICs All prospective ICs should fill out the Independent Contractor Questionnaire and they should provide the required documentation. Do not have an IC fill out an employment application; this makes the worker look like an employee. The Contract Administrator should review the questionnaire and documentation with the IC during an initial interview.   2. Required Documentation Ask any worker you plan to hire as an IC to provide the following documentation: ·    copies of the IC’s business license if required and any professional licenses the IC has, such as a contractor’s license ·    certificates showing that the IC has insurance, including general liability insurance and workers’ compensation insurance if the IC has employees ·    the IC’s business cards and stationery ·    copies of any advertising the IC has done, such as a Yellow Pages listing ·    a copy of the IC’s White Pages business phone listing, if there is one ·    if the IC is operating under an assumed name, a copy of the fictitious business name statement ·    the IC’s invoice form used for billing ·    a copy of any office lease ·    a photograph of the IC’s office or workplace ·    the IC’s unemployment insurance number issued by the state unemployment insurance agency (only ICs with employees will have these) ·    the names and salaries of all assistants that the IC will use on the job ·    the names and salaries of all assistants the IC has used on previous jobs for the past two years and proof that the IC has paid them, such as copies of canceled checks or copies of payroll tax forms ·    a list of all the equipment and materials the IC will use in performing the services and how much it costs ·    proof that the IC has paid for the equipment, such as copies of canceled checks, is very helpful ·    the names and addresses of other clients or customers for whom the IC has performed services during the previous two years (but don’t ask for the identities of any clients the IC is required to keep confidential), and ·    if the IC is a sole proprietor and will agree to do so, copies of the IC’s tax returns for the previous two years showing that the IC has filed a Schedule C, Profit or Loss From a Business. 3. Determining Whether Workers Qualify As ICs The Contract Administrator must examine the answers the worker provided on the Independent Contractor Questionnaire, the documentation and the task the IC is being hired to perform to see if the worker can qualify as an IC. This can be difficult because there is no single definition of an IC. Mechanical rules won’t work. For example, some firms will hire any worker as an IC so long as he or she is incorporated and works no longer than six months for the firm. While both these factors are very helpful, they are no guarantee that the worker will not be reclassified as an employee by government auditors. All the facts and circumstances must be examined and weighed on a case-by-case basis.   Check on Safe Harbor Protections If you can obtain Safe Harbor protection for the worker, you may treat the worker as an IC for employment tax purposes regardless of whether he or she qualifies as such under the normal IRS tests. Safe Harbor protection is available, however, only if you have consistently treated all workers performing similar services as ICs. One very important question to ask, therefore, is whether your company has ever used employees to perform services similar to those the IC will be asked to do. If you have, you can forget about Safe Harbor protection and you will likely have a harder task dealing with the IRS if you’re audited. For this reason, you’re much better off keeping the work your employees and ICs do separate.   4. Drafting and Signing an  Agreement If you determine that the worker qualifies as an IC, complete and sign an independent contractor agreement before the IC starts work. However, the IC may have his or her own agreement. If so, ask for a copy and use it as your starting point in drafting the agreement. This will show that the agreement is a real negotiated contract, not a standard form you forced the worker to sign. Pay particular attention to whether the IC’s agreement contains any provisions that should be deleted or amended, or whether new provisions should be added. 5. Backup Withholding Sometimes, you may have to withhold money from the IC and give it to the IRS. This is called backup withholding, and you can avoid it if you take the steps that we describe in subsection a, below. If you do find yourself in the position of having to do backup withholding, follow the procedures that we describe in subsection b, below. a. How to avoid backup withholding It’s very easy to avoid backup withholding. Have the IC fill out and sign IRS Form W-9, Request for Taxpayer Identification Number. Retain it in your IC file. You don’t have to file the W-9 with the IRS. This simple form merely requires the IC to list his or her name and address and taxpayer ID number. Corporations, partnerships and sole proprietors must have a federal employer identification number (EIN), which they obtain from the IRS. In the case of sole proprietors without employees, the taxpayer ID number is either the IC’s Social Security number or an EIN if the IC has obtained one. If the IC doesn’t already have an EIN, you don’t have to backup withhold for 60 days after he or she applies for one. It usually takes several weeks to obtain.   Which Is Better, a Social Security Number or EIN? A sole proprietor IC who doesn’t have employees can use either his or her Social Security number or a separate federal employer identification number as the taxpayer ID number. It’s better for you if the IC obtains an EIN. This helps show that the IC is running an independent business. Employees don’t have EINs. Encourage any sole proprietor IC you hire to obtain an EIN. Obtaining one is easy and costs nothing. The IC simply files IRS Form SS-4 with the IRS center listed in the instructions on the form. b. Backup withholding procedure If you are unable to obtain an IC’s taxpayer ID number or the IRS informs you that the number the IC gave you is incorrect, you’ll have to do backup withholding. Backup withholding must begin after you pay an IC $600 or more during the year. You need not backup withhold on payments totaling less than $600. For this procedure, you withhold 31% of the IC’s compensation and deposit it every quarter with your bank or other payroll tax depository. You must make these deposits separately from the payroll tax deposits you make for employees. Report the amounts withheld on IRS Form 945, Annual Return of Withheld Federal Income Tax. This is an annual return you must file by January 31 of the following year. See the instructions to Form 945 for details.   6. Keeping Records Create a file for each IC you hire. Keep these files separate from the personnel files you use for employees. Each file should contain: ·    the signed final IC agreement and copies of any interim drafts ·    the IRS W-9 form signed by the IC containing the IC’s taxpayer identification number ·    all the documentation provided by the IC, such as proof of insurance, business cards and stationery, copies of advertisements, professional licenses, copies of articles of incorporation ·    all the invoices the IC submits for billing purposes, and ·    Keep your IC files for at least six years.

At last but not least, using search engines such as Yahoo, Google, Ixquick, Catcha, ask.com, or Yellowpages to find a nearest suitable Contractor for your need. Do not hesitate to ask many questions. Good and credible contractors hire IT experts to handle their IT needs, from simple tasks such as handling Q&A to web Programers. Eventhough there are Huge and credible contractors who have simple website design. Just to remind you how simple www.google.com appearance is yet has Powerful muscle. Hopefully these few Tips might help you find a Good Responsible Contractor. Thank you   SM Engineering