Job Descriptions & Employee Classification Issues

Compensation rage: $45,000 – $80,000

A good way to develop a job description is to sit with current employees and ask them what their job entails. List everything…then work together to come up with a detailed, formal, written description. Do this for every position in the company.

USING INDEPENDENT CONTRACTORS

Kitchen and bath dealers frequently use independent contractors to provide help for their businesses. However, it’s important to be aware of proper payroll deductions because the U.S. Internal Revenue Service and Revenue of Canada keep a close watch on how small businesses classify independent contractors vs. employees.

Independent contractors are essentially self employed individuals who provide services using their expertise and their equipment to accomplish the job. An independent contractor is neither a consultant nor a vendor. A consultant usually advises management, while an independent contractor performs specific tasks. A vendor typically provides goods and services and operates at a separate established location, while an independent contractor works in your showroom.

Both the IRS and individual states often use the “20 Common Law Factor” test in determining whether or not to reclassify the tax treatment of a worker. If you’d like a copy of this, email me and I’ll forward it to you. Your legal and accounting advisors can also look at your job descriptions to see if they meet the IRS definition of an independent contractor.

Dealers use independent contractors to control hours and expenses, and to manage the ebb and flow of day-to-day business. Since many independent contractors have worked for a variety of businesses, they often bring a depth of experience and knowledge.

On the downside, it can be tougher to earn loyalty and confidentiality from independent contractors.

The best use of independent contractors is for filling in gaps, rather than handling everyday functions.

Remember, if you carefully craft your job descriptions and classify your employees in the right category, your business will be better run.