{"id":786,"date":"2016-10-11T15:00:26","date_gmt":"2016-10-11T15:00:26","guid":{"rendered":"http:\/\/amerilawyer-blog.local\/?p=786"},"modified":"2025-05-27T16:42:05","modified_gmt":"2025-05-27T20:42:05","slug":"misclassifying-workers-can-lead-to-costly-penalties-2","status":"publish","type":"post","link":"https:\/\/www.amerilawyer.com\/blog\/business\/misclassifying-workers-can-lead-to-costly-penalties-2","title":{"rendered":"Misclassifying Workers Can Lead To Costly Penalties"},"content":{"rendered":"<p>&nbsp;<\/p>\n<p><b>Avoiding payroll taxes by intentionally or unintentionally misclassifying employees as independent contractors is a costly mistake.<\/b><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Most often the misclassification will be discovered during an audit or if a former worker files a complaint. Under \u201cthe twenty factor test\u201d in Revenue Ruling 87-41, an employee is anyone who performs services for an employer if the employer can control what will be done and how it will be done. However, in an independent contractor relationship the employer has the right to control or direct only the result of the work done, and not the means and methods of a accomplishing the result.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><b>How to properly create an independent contractor relationship<\/b><\/p>\n<p>Foremost, you must have an independent contractor agreement in place. This will help define the responsibilities of the independent contractor to follow proper standards under the law. Next, the independent contractor should set up his own corporation or LLC. Then the \u00a0independent contractor relationship is between two entities. This helps the employer prove he is not controlling methods to accomplish the result.<\/p>\n<p><b>If you are a member of Spiegel &amp; Utrera, P.A.\u2019s <\/b><a href=\"http:\/\/www.amerilawyer.com\/general_counsel.htm\"><b>General Counsel Club<\/b><\/a><b> and have business related questions, call (800) 734-9900 or clubassist@amerilawyer.com for assistance. Remember, as a member of the \u00a0General Counsel Club, you receive unlimited legal, business, credit and tax advice all year long.<\/b><\/p>\n<p><i><span style=\"font-weight: 400;\">Spiegel &amp; Utrera, P.A. is a corporate law firm with its main offices located in Miami, Florida with offices throughout the United States. As a law firm, we do more than just help you form your business entity. We stand ready to help with the maintenance of your legal business entity! We will assist you with <\/span><\/i><a href=\"http:\/\/www.amerilawyer.com\/form_a_corporation\/corporation.htm\"><i><span style=\"font-weight: 400;\">Incorporation Service<\/span><\/i><\/a><i><span style=\"font-weight: 400;\">, <\/span><\/i><a href=\"http:\/\/www.amerilawyer.com\/trademark\/index.htm\"><i><span style=\"font-weight: 400;\">Trademarks<\/span><\/i><\/a><i><span style=\"font-weight: 400;\">, <\/span><\/i><a href=\"http:\/\/www.amerilawyer.com\/trademark\/tm_copyright.htm\"><i><span style=\"font-weight: 400;\">Copyrights<\/span><\/i><\/a><i><span style=\"font-weight: 400;\">, <\/span><\/i><a href=\"http:\/\/www.amerilawyer.com\/living_trust.htm\"><i><span style=\"font-weight: 400;\">Estate Planning<\/span><\/i><\/a><i><span style=\"font-weight: 400;\">, <\/span><\/i><a href=\"http:\/\/www.amerilawyer.com\/general_counsel.htm\"><i><span style=\"font-weight: 400;\">Legal Counsel<\/span><\/i><\/a><i><span style=\"font-weight: 400;\">, <\/span><\/i><a href=\"http:\/\/www.amerilawyer.com\/assetprotection\/index.htm\"><i><span style=\"font-weight: 400;\">Wills<\/span><\/i><\/a><i><span style=\"font-weight: 400;\">,<\/span><\/i><a href=\"http:\/\/www.amerilawyer.com\/livingtrusts\/index.htm\"><i><span style=\"font-weight: 400;\">Trusts<\/span><\/i><\/a><i><span style=\"font-weight: 400;\">, <\/span><\/i><a href=\"http:\/\/www.amerilawyer.com\/agreements\/\"><i><span style=\"font-weight: 400;\">Agreements &amp; Leases<\/span><\/i><\/a><i><span style=\"font-weight: 400;\">, <\/span><\/i><a href=\"http:\/\/www.amerilawyer.com\/\"><i><span style=\"font-weight: 400;\">Corporate &amp; Company<\/span><\/i><\/a><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":null,"protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,72,6,7],"tags":[],"class_list":["post-786","post","type-post","status-publish","format-standard","hentry","category-business","category-entrepreneur","category-legal-services","category-taxes"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.8 (Yoast SEO v27.8) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Misclassifying Workers Can Lead To Costly Penalties<\/title>\n<meta name=\"description\" content=\"Most often the misclassification will be discovered during an audit or if a former worker files a complaint.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.amerilawyer.com\/blog\/business\/misclassifying-workers-can-lead-to-costly-penalties-2\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Misclassifying Workers Can Lead To Costly Penalties\" \/>\n<meta property=\"og:description\" content=\"Most often the misclassification will be discovered during an audit or if a former worker files a complaint.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.amerilawyer.com\/blog\/business\/misclassifying-workers-can-lead-to-costly-penalties-2\" \/>\n<meta property=\"og:site_name\" content=\"Amerilawyer - Incorporate, Trademark &amp; 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