Ignorance might be bliss……but it can also be quite expensive. If you hire a handyman and treat him like an independent contractor, that is, you don’t withhold payroll taxes and FICA (social security) from his paychecks. Chances are everything will ‘be just fine unless something goes wrong. What mostly goes wrong is you fire him or worse yet, he falls off your roof. He then goes straight to the nearest state employment office and files for unemployment pay or disability benefits. Naturally he forgets to tell the state office that you and he had mutually agreed to the no payroll tax withholding. He might even forget to mention that the independent contractor idea was his to begin with. He will likely claim, he was only your humble employee. The nice lady at the desk will ask for your version, however. Government people want clear cut employers or independent contractors. They don’t have much compassion for folks who aren’t one or the other. That likely means you’re not withholding taxes.
It’s say your co called independent contractor is judged to be an employee when he fell off your roof. Also we’ll say you were so sure about his independent contractor status that you didn’t purchase worker’s compensation insurance. Right now my friend – You’re in very deep horse “Pucky”. Many employers cover their independent contractors with worker’s compensation insurance for just this reason. In my judgment, that tends to look like you secretly harbor some thoughts that your handyman is really a quacking duck and not really a swan, as he claims. Many handymen will not work unless you pay them cash. If you own any assets and you’re caught paying cash be prepared to lose them!
My mini training course “HOW TO HIRE A HANDYMAN AND PROTECT YOURSELF” will help you avoid the pitfalls!