Knowing how to hire an independent contractor in Texas is made easier with the right information.
If you are a small business owner in Texas or simply a business owner looking to save money however you can, you might have considered hiring an independent contractor. While this is a great way to get the work you need done while saving some money, you have got to hire your contractor the right way to ensure you do not accidentally violate employment law.
Know the difference between contractors and employees
During your search, be sure you actually hire an independent contractor and not an accidental employee. If the person sets her or his own hours, works on a project basis rather than an ongoing basis and works with other entities other than yours, he or she is likely to be considered an independent contractor. Should you hire an employee and continue with the impression you are working with a contractor, you can expect the IRS to hit you with fines, penalties and the like.
Get the right forms
Companies that hire contractors need to make sure they have the person fill out a 1099-MISC form if the contractor is paid at least $600 within a year. This completed form should also be sent to the IRS. Additionally, it is best to have contractors sign a business contract that lays out the terms of the working relationship so everyone is on the same page and so there is no confusion between parties.
Know whom you are working with
If you want good work, you have got to work with contractors experienced in their craft and know what they are doing. Depending on how intensive the work will be, you might want to conduct a background check on the contractor, and do not hesitate to ask for recommendations or examples of past work so you have an idea of the results you can expect.
Agree on a payment method
Besides agreeing on how much you will pay a contractor, you should also come to an agreement on how the contractor will be paid. For instance, will you pay an hourly rate, or in a lump sum once the job is done? You might also want to break up payments according to when certain aspects of the job are done. Either way, make sure the method is one on which you both agree and are comfortable with.
If you are unfamiliar with working with independent contractors in Texas, it is a good idea to complete the process with a bit of legal help. Reach out to lawyers to understand which steps to take to protect your business, your business interests and your overall peace of mind.