In short, Yes. Mis-classification of the individuals who provide services for your business is one of the main reasons business owners face penalties and back taxes from the IRS or Department of Labor.Fines from these agencies can cripple a small business and send business owners back to square one.
The first piece of information that needs to be determined is the business relationship between yourself and the individuals that provide services for you. Three main facts determine the degree of control and independence of a business relationship:
• Behavioral Control • Financial Control • Type of relationship
Obviously these relationships can get very complicated, which leads to the perceived blurred lines and confusion. It is highly recommended that you seek professional advice up to IRS judgment on this subject.
