The decision to expand your company by using other entertainers to fill more bookings, is an important step in the growth of your company. There are many “land mines” in the area of labor relations, and your state may have specific rules about classifying employees vs. independent contractors.
Simply, employees work for you and only you and you pay their medicare, social security and unemployment compensation via payroll deduction, along with payroll taxes to the state and federal government (i.e. tax withholding). Independent contractors on the other hand, are liable for their own tax reporting and you pay them a set fee for their services.
The federal and state governments have strict rules about how each type of worker is classified and penalties ensue if you classify them incorrectly. The attachment below may help you to understand the differences.
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