Today's Technology for Tomorrow's Firm.
Issue link: https://cpapracticeadvisor.epubxp.com/i/528834
June/July 2015 • www.CPAPracticeAdvisor.com 33 On-demand services providers hire workers to provide a service "on demand" to customers. For companies like Lyf and Uber, workers provide their own vehicles and set their own hours. Tey are also responsible for their own tax bill and ensuring they pay the right amount. For the workers, the on-demand service industry is appealing because it can provide the fexibility they need or want. Many probably don't consider their employment classifcation until some- thing happens that brings that classifcation into question, such as an on-the-job injury. Te string of lawsuits, as well as the Afordable Care Act, are bringing the debate front and center again. Te IRS is cracking down to ensure that companies don't try to avoid prov iding insurance under the ACA by misclassif y ing workers. Te lawsuits against on-demand companies are looking at if one criterion should weigh more than the others. For example, if workers provide their own tools and set their own working hours, but provide a service that is at the core of the company, are they employees? W hile there is no clear-cut answer, as a payroll practi- tioner, it's imperative that you help your clients navigate through the state and federal laws when classifying workers. Misclassifying workers could be a costly mistake. Te issue is even trickier for companies that operate in separate states, as each state may have diferent rules and regulations. Make sure that you and your clients discuss the laws in each state they operate in. If your client operates in the on-demand space, then now's a good time to reassess how workers are classifed. Compare the employment conditions of the independent contractors to those that are classifed as workers. A re there many similarities? Determine the relationship between your client and their independent contractors, as well as the amount of behavioral and fnancial control they exhibit over their workers. Most companies may classify their workers as independent con- tractors, but if they have stipulations that prevent workers from working elsewhere, then they may not truly be inde- pendent contractors. If you or your clients fnd they need to change the clas- sifcation of any workers, they will also need to make provi- sions to pay payroll taxes and health coverage for these employees. Businesses can also face fnes imposed on them for their entire p a y r o l l , e v e n t h o s e c l a s s i f i e d a s employees if they are found guilty of worker misclassifcation. T he recent employ ment trend of workers mov i ng to t he on-dema nd service industry has created an uptick in the number of workers classifed as self-employed. However, just because they create their own schedule doesn't mean that they are not still, in fact, employees. Work with your clients to ensure that all worker classifcation is in line with federal and state tests. Doing so now c a n prevent cost ly pay rol l headaches later. On-Demand Services and the Ongoing Employee vs. Independent Contractor Debate By Taija Jenkins I f you've been following the news lately, then you've probably heard of the lawsuits against some of the on-demand service providers which beg the question: are workers employees or independent contractors? A Year in the Life of a PAYROLL Accountant is sponsored by SurePayroll and ADP Connect to ADP ® At ADP, we're all about connections — connecting accounting professionals like you to the right resources and opportunities to support your frm's objectives: • Give your clients access to big-business payroll and HR solutions by referring them to ADP • Generate more revenue and simplify payroll processing with our customized platform for accountants • Discover other segments to invest in or retire sooner by selling your client payroll base to ADP When you partner with ADP, you also connect to integrated HR products, retirement and more — everything your clients need to help protect and grow their business. For more information, visit adp.com/accountant or call 1-855-408-3751. The ADP logo and ADP are registered trademarks of ADP, LLC. Copyright © 2014 ADP, LLC. HR. Payroll. Benefts. Payroll Accountant's Checklist for June ✓ Reassess tax-time issues and processes ✓ Create a communication plan for keeping in touch with clients ✓ Think about business plans and create goals for business ✓ Start succession planning and create an exit strategy for frm ✓ Reassess and retain/remove clients as needed