Can a nonprofit organization be an independent contractor?
Nonprofit organizations have to determine whether individuals are independent contractors or common law employees. This blog post discusses how to distinguish the two types of workers, filing requirements for each type of worker and the potential consequences of misclassification.
What are the benefits of being an independent contractor?
Employees tend to have set hourly wages or salaries. Independent contractors are typically paid either flat rates or for set time or materials. Another important consideration is that independent contractors are typically able to freely seek out business opportunities. If the worker is limited in this aspect, then the worker is likely an employee.
Who is considered an independent contractor by the IRS?
Basically, anyone who does work for your business who is not an employee could be considered an independent contractor. You may or may not have a written contract with this person or company. It’s important to note that the IRS assumes that a worker is an employee unless you can prove that this person is not an employee.
Is it illegal to have employees and independent contractors?
Many businesses have some employees and some independent contractors, and there is nothing improper in so doing. However, it is inappropriate to have to have one worker selling shoes on an independent-contractor basis and another similarly situated worker doing the same thing as an employee.
Nonprofit organizations have to determine whether individuals are independent contractors or common law employees. This blog post discusses how to distinguish the two types of workers, filing requirements for each type of worker and the potential consequences of misclassification.
Who is an independent contractor for a low income housing organization?
She also is to perform additional electrical installations under contracts with other organizations, that she obtained through advertisements. Vera is an independent contractor to the low income housing organization. Refer to Paying Independent Contractors if you need information on what your responsibilities are when paying contractors.
Employees tend to have set hourly wages or salaries. Independent contractors are typically paid either flat rates or for set time or materials. Another important consideration is that independent contractors are typically able to freely seek out business opportunities. If the worker is limited in this aspect, then the worker is likely an employee.
Many businesses have some employees and some independent contractors, and there is nothing improper in so doing. However, it is inappropriate to have to have one worker selling shoes on an independent-contractor basis and another similarly situated worker doing the same thing as an employee.
Can a fundraising consultant be an independent contractor?
Just because your fundraising consultant wants to be an independent contractor, does not mean that the worker who is writing grant proposals and advising your board about donor-prospects meets the legal definition of a consultant/independent contractor.
How to distinguish between independent contractor and common law employee?
If a nonprofit organization is having difficulties distinguishing between an independent contractor or a common law employee, a good starting point would be IRS.gov, which lays out all the factors mentioned above. Additionally, examples of the two types of relationships are described by the IRS here: https://www.irs.gov/pub/irs-pdf/p15a.pdf.
How does an independent contractor report their income?
[vii] This is usually done by filing a 1099 for each contractor with the IRS. The independent contractor is also given a copy and must report the total payments received as income on his or her tax filing.
Just because your fundraising consultant wants to be an independent contractor, does not mean that the worker who is writing grant proposals and advising your board about donor-prospects meets the legal definition of a consultant/independent contractor.
What should I sign as an independent contractor?
Independent contractors should sign a written contract with the nonprofit describing the scope of work instead. The agreement is also a good place to document that the independent contractor/consultant understands that s/he is responsible for his/her own income taxes and insurance coverage.
If a nonprofit organization is having difficulties distinguishing between an independent contractor or a common law employee, a good starting point would be IRS.gov, which lays out all the factors mentioned above. Additionally, examples of the two types of relationships are described by the IRS here: https://www.irs.gov/pub/irs-pdf/p15a.pdf.