Millennium Funding News

Often when we ask a company that wants to factor invoices for their 941 tax forms and proof of payment we are met with the answer they do not have employees but independent contractors who work on a 1099 basis. To most small business owners this means the workers fall outside of the requirements to pay payroll taxes, cover them with worker’s compensation insurance, healthcare insurance or other benefits. This makes a 1099 contractor less expensive than an employee. And lower costs are always attractive to a small business.

Since the federal and state governments collect less tax revenue for 1099 contractors they are cracking down on small businesses that have misclassified 1099 workers. If you are classifying workers as 1099 contractors it is a good idea to make sure the IRS agrees with you by completing and submitting the SS-8 form. It is also a good idea to have your tax accountant review worker status and make sure they are prepared to defend the classification if the need arises.