How to navigate the increasingly dangerous waters of worker classification

Just as the stakes are getting higher, worker classification is getting trickier. The rise of the gig economy has led to an exponential increase in the number of independent contractors it brings into the labor pool each day. Lawmakers are taking note,  and the government ain’t playin’. Tax and employment law violations can lead to severe consequences. Employers shouldn’t play either. Here are some ways to tell the difference between an employee and an independent contractor and some questions worth asking before bringing an independent contractor on board.

 

How to tell independent contractors and employees apart

This is a meaty subject with a mountain of government legalese to back it up. Thankfully, employers can look at some of the main factors the government considers to sort out any areas of confusion, including the following:

  • The employer’s degree of control over the worker
  • The worker’s opportunity for profit or loss
  • The worker’s investment in facilities
  • How long-term the relationship is
  • The worker’s skill set

If you’re confused by gray areas, of which there are plenty, Upwork provides a simple IC v. employee compare-and-contrast chart that would make your high school English teacher proud. We also dive deeper and provide a handy cheat sheet and additional resources on the subject here.

But if you’re still uncertain, engaging a contractor management firm is your safest bet.

 

Questions to ask before hiring an independent contractor

1.  Am I confident I could make a strong case for the classification we chose?

If there is any question whether you’re on solid ground with your decision, you’re probably on very un-solid ground. It’s worth engaging support to make sure you get it right before it hits the courtroom.

 

2. What are the consequences if I get it wrong? 

Uber has provided über lessons on worker classification woes. It’s clear that the consequences can be steep and that the DOL is ready to drop the hammer on misclassification.

 

3. Do I need professional support and a built-in insurance plan to make sure I get it right? 

Navigating the dangerous waters and staying compliant is harder and more important than ever. Worker classification is one of those areas in which you can’t afford to take risks. Partners who make your life easier are worth the investment. A payroll service may be right for those who don’t have the bandwidth or interest in digging into the legalese. At PayReel, we manage payroll taxes and, as the employer of record, we even take on all risk associated with a variable workforce. Think you might benefit from hiring a payroll service? Here’s a handy guide to find out more.

 

About PayReel

When it comes to event payroll, payroll taxes, and so much more, PayReel makes your life easier. Producing multimedia content and executing live events is chaotic. At PayReel, we make sure our clients are able to hire who they want, when they want and that everyone is paid properly. Leave all payroll services and details up to the PayReel team so you can focus on pulling off a flawless production. Contact us anytime at 303-526-4900 or by emailing us here.

Relax. We got it.

 

Six reasons PayReel projects are better projects

Whether it’s a massive event or a one-camera shoot, when PayReel manages your projects, it’s the best for clients and workers alike. At PayReel, we’re devoted to making every single client and worker interaction a good one.

 

We make your life easy and your workers happy

 

1. We do it all.

Unlike the big guys, we handle events of any kind and any size, whether you’re payrolling thousands of workers or sending a one-person crew to film an NBA game.

 

2. We’re here. We even answer the phone.

Events don’t operate on a nine-to-five schedule and neither do we. We have an after-hours phone so we can be sure to provide speedy answers.

 

3. We’re paperless.

Not having to sift through piles of identical paperwork cluttering up your desk and your headspace makes the process quicker and easier for you and for your workers.

 

4. We offer speedy payment.

Workers submit timecards on Mondays and we pay them on Fridays. When they’re paid quickly, workers won’t be calling your office, which frees you up to do your job better. Of course, it also keeps workers happy so they are free to focus on your project and happy to come back for your next event.

 

5. We keep workers happy.

Speaking of keeping workers happy, the last thing you need once you’ve hired workers is to lose their loyalty on the back-end details. Whether they’re working for one day or for a month, we make sure workers get paid quickly and accurately so if you want to use them again, they’ll be ready to pick up the call.

As Michael, one of the freelancers PayReel pays, said, “Natalie ( on of our PayReel Customer Experience Manager) has been superb in addressing whatever problems I have had.”

 

6. We make event payroll as easy as 1, 2, 3, w-4.

By managing all the payment details, including the mountains of W-4s, we make event payroll a non-event.

 

The bottom line

You work with us because we make your life easier. Why not use us for all your events and workers? Not only does our team manage event payroll and payroll taxes; as the employer of record, we even take on all risk associated with a variable workforce. Think you might benefit from hiring a payroll service? Here’s a handy guide to find out more.

 

About PayReel

When it comes to event payroll, payroll taxes, and so much more, PayReel makes your life easier. Producing multimedia content and executing live events is chaotic. At PayReel, we make sure our clients are able to hire who they want, when they want and that everyone is paid properly. Leave all payroll services and details up to the PayReel team so you can focus on pulling off a flawless production. Contact us anytime at 303-526-4900 or by emailing us here.

Relax. We got it.

 

The gig economy: How to pay contractors and navigate benefits

The gig economy offers benefits to workers and companies alike. While those benefits do include flexibility for workers and lower costs to employers, they don’t cover things we’ve grown used to such as built-in 401K plans, health insurance options, and worker’s compensation. For many independent contractors, that’s a problem. And as the gig economy’s slice of the economic pie grows, so does the problem. Currently, there is no roadmap telling you how to pay contractors fairly while keeping costs down. The good news is that we at PayReel have been on this road long enough to learn how to pay contractors legally and ethically.

 

Start with worker classification

First things first: classify workers correctly from the outset. A worker’s classification (whether they’re an employee or an independent contractor) guides what benefits they’re entitled to by law. The rise of the gig economy has brought with it the rise of confusion over who is an employee and who is a contractor. Wherever gray areas and money meet, you will find lawsuits. True to form, legal disputes over worker classification have plagued everyone from Uber to FedEx. Following the rules and classifying correctly from the beginning saves time and potential legal troubles.

 

Stay aware of potential legal changes

From workers to legislators, people are thinking about how to manage the evolving landscape. Some envision an entirely new system with changing guidelines that suit changing times. Such a system might include “portable benefits” that travel with workers from company to company.

According to this article from the Pew Charitable Trusts, one bill proposes to:

“require people or companies that find work for and transfer payments to independent contractors — Uber, say, or a middleman who works with farm laborers — to contribute to a pool of money managed by an independent nonprofit. The broker might do that by charging consumers extra or by taking the money out of workers’ pay.

Contributions would be made at least monthly and would have to amount to either $6 per hour worked or 25 percent of the sum charged to the consumer, whichever is smaller. The money could be spent on paid time off, health insurance or other qualified benefits.”

We can only guess how things will change, but we do expect them to change. It behooves company leaders to stay in tune with these kinds of conversations and legal considerations.

 

Consider more than the bottom line

Some companies aren’t waiting for a legal mandate to make changes. Instead, they are voluntarily providing benefits beyond their legal requirements. Care.com, for example, adds a small fee to each transaction, which converts to “benefits bucks” that service providers may use for expenses such as transportation. This kind of perk goes beyond the money in a worker’s pocket. Workers who feel valued are more loyal and do better work.  

 

Protect yourself

If you can’t (or just don’t want to) keep up with the rules and developments surrounding the on-demand economy, PayReel can keep up for you. Check out this handy guide to see if you might benefit from hiring a payroll services company. Not only does our team manage worker classification, payroll, and payroll taxes; as the employer of record we even take on all risk associated with a variable workforce. Going above and beyond in the ethics department isn’t just a warm and fuzzy notion. It’s a sound business decision, too.

 

About PayReel

When it comes to payroll taxes and so much more, PayReel makes your life easier. Producing multimedia content and executing live events is chaotic. At PayReel, we make sure our clients are able to hire who they want, when they want and that everyone is paid properly. Leave all payroll services and details up to the PayReel team so you can focus on pulling off a flawless production. Contact us anytime at 303-526-4900 or by emailing us here.

Relax. We got it.

 

IRS mistakes cost big (even when they’re not your fault)

 

A case involving embezzlement, tax liability, and good intentions added up to a nightmare for one man. Dr. Robert McClendon’s story proves there’s no amount of caution too intense when it comes to payroll tax liability.

 

The road to hell is paved with good intentions

In a sobering case reported in Forbes, a man who loaned $100,000 to a struggling business was fined $4.3 million for said company’s payroll tax liability. When you dig into the details, it’s not as unfair as it may seem at first blush, but that doesn’t make the situation any less painful for Dr. McClendon—the defendant and a legally-deemed responsible party. As the Forbes article states, “You can be ‘willful’ under the tax law even if you didn’t have a bad motive or evil intent.”

So what was the kiss of death for Dr. McClendon?

 

Responsible & willful: A match made in IRS hell

Dr. McClendon owned the business to which he loaned the money and the cash went toward the seemingly noble goal of paying employees to prevent shuttering the doors altogether. While it was an employee who’d embezzled the funds earmarked for payroll taxes, the case against Dr. McClendon was strong enough to prove him responsible and willful. He wasn’t responsible for the embezzlement but he was responsible for choosing to pay employees instead of the payroll taxes, which by that time, he knew about. The case against Dr. McClendon withstood the legal tests and left the doc to nurse his own wounds. Ouch.

 

How to protect yourself

Either learn the rules of payroll taxes and precisely follow them or hire a qualified company to do it for you. The Forbes article suggests that one benefit to hiring a payroll service is that “the employer doesn’t have discretion to use the money to pay vendors or for anything else.” It’s sort of like a much higher stakes version of a 401K: If you can’t access the money when the temptation for an out-of-reach car comes up, you’ll still have it when you need it for less sexy reasons. Additionally, hiring a payroll service takes the burden of having to understand all of the rules and make heavy decisions off the company leadership.  The payroll service takes on the liability and frees up the small business to focus on business.

 

The bottom line:

There are too many ways to get in trouble with the IRS to choose ignorance. With fines and possible jail time on the line, legitimate small businesses must take payroll taxes seriously. The government sure does.

 

About PayReel

When it comes to payroll taxes and so much more, PayReel makes your life easier. Producing multimedia content and executing live events is chaotic. At PayReel, we make sure our clients are able to hire who they want, when they want and that everyone is paid properly. Leave all payroll services and details up to the PayReel team so you can focus on pulling off a flawless production. Contact us anytime at 303-526-4900 or by emailing us here.

Relax. We got it.

 

Four ways going freelance could land you your dream job

Considering quitting your day job but concerned about the long-term effects on your future prospects? It’s time to think differently. Here are four ways freelancing could actually boost your career in the long run:

 

Get paid to find—or sharpen—your passion

People pay a boatload of money to refine their skills at college. Freelancers get paid to do it! In Outliers, Malcolm Gladwell shares the theory that it takes roughly ten thousand hours of practice to achieve mastery in a field. We can’t vouch for this particular number, but it is a tried-and-true, oft-repeated principle that practice makes perfect. As a freelancer, you get to bid for jobs that seem exciting to you and decline ones that don’t. As you go, you’ll hone in on where your lane is and have the freedom to develop it to the point of mastery. Then you can either keep running in that lane as a freelancer or take those finely tuned skills you’ve developed to your next full-time job. Highly skilled workers with a shorter learning curve have a leg up on the competition.

 

It’s like a paid audition

Freelancing gets your foot in the door at multiple companies without any commitment. If you love a business’s culture or brand, you may want to make their next project a priority. If you don’t like the experience, you don’t even have to bid for the job the next time around. You get to develop your clientele with companies and people you enjoy and then have a built-in connection for future opportunities. If you do well enough on your audition, you’ll get job offers—either for more freelance work or for full-time gigs. From there, it’s up to you to decide whether you want to accept an opportunity with a company or keep working for yourself. The power is in your hands.

 

Build your network

Once you’ve achieved mastery in an area, the world really starts to open up. When you do great work, people talk about you. After all, being able to refer someone reliable and easy to work with makes them look good, too. Talented freelancers organically build a robust network that includes both decision makers and people in related fields who will send work their way.

 

P.S. There are tax benefits

So maybe it’s not a direct boost to your long-term career options, but the tax benefits are a pretty enticing bonus. There are mountains of deductions available to independent contractors (home office, business miles, office supplies, and more). You just need to make sure you keep careful records in order to take advantage of them. Under Trump’s proposed tax code overhaul, some independent contractors could have even lower taxes in the near future. Keep in mind, though, that freelancers are on the hook for their own self-employment tax, health insurance, vacation days, and retirement plans.

 

The bottom line:

Many factors determine whether freelancing is the right fit for your life. Managing your own schedule, finances, and other complex aspects of your career isn’t easy and it’s not for everyone. For some, it may be exactly the thing that allows them to live the life they want to live while doing the work they love to do. For others, it might be the right thing, but only for a season. After a foray into freelance, they may want to take all their experience back into a company job. Whether freelancing is a stepping stone to your full-time dream position or the long-term career path you didn’t even know you wanted, it might just be time to go for it.  

 


 

About PayReel

Producing multimedia content and executing live events is chaotic—and working them is even more so! At PayReel, we minimize the time and effort it takes to get you ready for your project, make sure you get paid quick and easy, and have customer service agents on call around the clock to answer you questions. The next time you work an event or a production, tell your supervisor you love working with the PayReel team. Contact us anytime at 303-526-4900 or by emailing us here.

Relax. We got you!

What do Trump’s first 100 days mean for the on-demand economy?

 

If anything’s certain, it’s that very little is certain when it comes to the rumors and grand plans that often surround any President’s first 100 days in office.

Worker classification was a major focus during President Obama’s administration, which resulted in a rash of highly-publicized lawsuits and debates across the U.S. just as the the on-demand economy was coming of age.

The Trump administration’s focus on that same unique issue might actually play out favorably this time around for employers who rely on independent contractors. But before you throw all your paperwork out the window—that doesn’t mean classification is going out the window, too. In fact, some states and localities might even tighten restrictions and increase punishments for misclassification in response to relaxed federal law.

In short, things are as up in the air as ever when it comes to federal government trying to keep up with rapid developments in the on-demand economy.

Here’s what to do while you wait to see what President Trump’s first 100 days mean for the on-demand economy.

 

Be vigilant when it comes to compliance

Federal, state, and local regulations already change regularly; who knows how things could fluctuate as the government tries to get a grasp on how benefits, taxes, and everything else could and should shift as workforces get more and more nontraditional.

 

Don’t slack on classification

The process of classification might eventually get easier, but it’s not likely to go away. If the current situation is any indication, it could even get a bit hairier for some states and localities as they react to uncertain or lax laws at the federal level.

 

The bottom line:

If you can’t (or just don’t want to) keep up with the rules and developments surrounding the on-demand economy—PayReel can keep up for you. Not only does our team manage worker classification, payroll, and payroll taxes; as the employer of record we even take on all risk associated with a variable workforce.

 


 

About PayReel

Producing multimedia content and executing live events is chaotic. At PayReel, we make sure our clients are able to hire who they want, when they want and that everyone is paid properly. Leave all payroll services and details up to the PayReel team so you can focus on pulling off a flawless production. Contact us anytime at 303-526-4900 or by emailing us here.

Relax. We got it.

 

Considering freelancing? Trump’s tax changes might convince you to take the leap.

The freedom that comes with being an independent contractor often comes at a price. Being in the driver’s seat means managing your own schedule, finances, and a lot of other complex aspects of your career. Independent contractors must pay their own self-employment tax, pay for health insurance out of pocket, and don’t have paid time off or employer matching on retirement contributions. In addition, while there are multiple opportunities for deductions and credits on the tax front, keeping careful records is essential to being able to take advantage of them.  

While many people enjoy the relative stability of a full-time job, some crave the freedom and control of being an independent contractor. President Trump’s proposals for tax changes are far from guaranteed, but they may be enough to push some people off the fence and into freelance. 

So what do small business owners and potential small business owners need to know?

 

Trump’s plan includes lower tax rates for small business

Under Trump’s proposed tax code overhaul, some businesses would be subject to lower tax rates topping out at 15 percent instead of the current 35 percent. Such businesses include Subchapter S corporations and, in some cases, limited liability companies or partnerships. According to this New York Times article, that includes “those in which income and deductions accrue directly to the owners and are reported on their personal tax returns.” Lower tax rates increase the incentive for full-time employees to approach employers about working as an independent contractor instead. 

 

It’s still hypothetical

Like everything in government, this tax code overhaul will be up for debate. One major concern includes that such a reduction in tax revenues could mean an increase in national debt. Legislators will be sure to contribute their own opinions and carry out negotiations before anything actually changes. According to Trump, though, the plan is “very well finalized” and will become a focus after the ACA repeal efforts. One way or another, we’ll have some time before we see how things play out. 

 

The bottom line:

Don’t quit your day job. Well, at least not yet. Tax laws are always subject to change (so much so that even the original link on the Trump Administration’s website now leads to an error page). As such, tax considerations alone shouldn’t be the foundation for a decision as big as becoming an independent contractor. The bigger question is whether freelancing is the right fit for your life. If it is, then go ahead and get behind the driver’s seat. Enjoy the ride and be sure to track those business miles—they’re deductible!

 


 

About PayReel

Producing multimedia content and executing live events is chaotic. At PayReel, we make sure our clients are able to hire who they want, when they want and that everyone is paid properly. Leave all payroll services and details (even managing your independent contractors!) up to the PayReel team so you can focus on pulling off a flawless production. Contact us anytime at 303-526-4900 or by emailing us here.

Relax. We got it.

Don’t know if your locality taxes? Might be time to hire a payroll service.

Would you rather think about federal, state, and local (yes, local—such as in NYC and LA) taxes more or less?

A) More

B) Less

If you answered A, you have found your calling in life. Become a CPA and you can spend your days researching tax laws and perfecting the art of the deduction. We are forever grateful for tax professionals who view Schedule Cs as their signature move and audits as their national championship games. Note: Unless you’re one of said saintly tax professionals, (which we’re not) you’re not legally allowed to give your employees tax advice. Send them to the IRS.

If you answered B, a payroll service may be the solution that gives you a whole lot less to think about when it comes to taxes.

 

Here’s how to think about taxes less

If you can’t (or just don’t want to) keep up with the rules and developments that happen almost yearly with federal, state, and now local taxes—PayReel can keep up for you. Not only will we research the ever-changing laws, we will also handle W-4s, keep you compliant on worker classification, and make sure you’re paying freelancers fairly and accurately.

 

The bottom line:

It’s really simple when you think about it—and even more simple when you don’t. Work with PayReel and save on time, fines, and headaches by taking tax management off your plate. Contact the PayReel team  at 303-526-4900 or by emailing us here so you can get back to focusing on pulling off your next flawless production.

 


 

About PayReel

Producing multimedia content and executing live events is chaotic. At PayReel, we make sure our clients are able to hire who they want, when they want and that everyone is paid properly. Leave all payroll services and details (even taxes) up to the PayReel team so you can focus on pulling off a flawless production. Contact us anytime at 303-526-4900 or by emailing us here.

Relax. We got it.

 

How do you keep track of all those W-4s?

 

The infamous W-4 might seem like a simple little piece of paper on the surface, but it’s how employers calculate tax withholdings. And unfortunately, it has the less-than-magical power to multiply exponentially when you execute live events, produce multimedia content, or just simply employ a whole lotta people.

 

Here’s why W-4s are so dang hard to keep track of:

1. They’re subject to change without warning

This is one of those documents that employees can change as often as they want. Maybe they got married or moved to a new address. Or, maybe they change their mind about the number of allowances they want to claim every month. Whatever the reason for the change, employers must implement changes within 30 days of receiving new paperwork. That’s a lot of uncertainty combined with a lot of time updating records.

 

2. The battle continues: State versus federal

Some states use their own unique W-4s, some just default to the federal W-4, and some even call them by another name entirely. Some states (Here’s lookin’ at you, Nevada!) don’t even tax while others have a slightly more complicated approach than usual. For example, in California if an employee has more than 10 exemptions, their W-4 needs to be sent to the federal government for verification. Any other place, if an employee needs more than 10 exemptions, they’ll need a lock-in letter from the IRS. To top it all off—any of this could change at any time.

 

3. Employee mistakes cost YOU time

When state or federal government does an audit on individual taxes and discovers someone has been withholding incorrectly (usually it happens when an employee claims exempt), the government sends a letter to the employer requesting the corrected paperwork. Did we mention that the tax filing process could cause uncertainly and eat up your time…?

 

The bottom line:

Even if you hired an employee for a single event or just one day last year, you still have to have the correct W-4 for them. Whether you don’t know how to keep track of the W-4 du jour, aren’t sure how to get your hands on the right documents, or you just simply don’t have the time; PayReel can save you the headache by taking tax management off your plate. We can make all that hands-on paper-collecting and tax management a distant memory—including keeping you compliant. In the wise words of Forrest Gump, “Well that’s good. One less thing.”

 

One more thing: There are certain career paths (like tax lawyering) that really require a special type of person. Unless you’re one of those, (which we’re not) you’re not legally allowed to give your employees tax advice. Send them to the IRS.

 

About PayReel

Producing multimedia content and executing live events is chaotic. At PayReel, we make sure our clients are able to hire who they want, when they want and that everyone is paid properly. Leave all payroll services and details (even taxes) up to the PayReel team so you can focus on pulling off a flawless production. Contact us anytime at303-526-4900 or by emailing us here.

Relax. We got it.

 

Is preparing for April 15 a pain in your tax? We can help.

Doing taxes is as challenging as solving a Rubik’s cube, but without any of the fun. Also like a Rubik’s cube, there are endless ways to get it wrong. For individuals, getting taxes wrong can be painful, but the stakes are even higher for businesses.

One of the biggest challenges we’re seeing for businesses right now is the rise in popularity of local taxes. Since most state W-4s don’t list such taxes directly, employees and employers are left to find out about changes through trial and error (yikes!). New Yorkers: Take heart. Yours is the one state that has localities listed on the W-4s and allows employees to claim different deductions on the local, state, and federal levels.

No matter where you are, it’s a lot to think about.

 

Would you like to think less about taxes? Here’s how hiring PayReel can help: 

As the employer of record, we’re responsible for taxation. That means you can save yourself some time and headache. We handle it all. We keep addresses up to date, send out W-4s, and make sure your workers are classified correctly so you give them the correct forms. We also make sure you’re using the right W-4 for your state and keep track of the federal, state, and local taxes.

Hand over the Rubik’s cube. We’re like this guy.

 

One more thing: There are certain career paths (like tax lawyering) that really require a special type of person. Unless you’re one of those, (which we’re not) you’re not legally allowed to give your employees tax advice. Send them to the IRS.

 

About PayReel

Producing multimedia content and executing live events is chaotic. At PayReel, we make sure our clients are able to hire who they want, when they want and that everyone is paid properly. Leave all payroll services and details (even taxes) up to the PayReel team so you can focus on pulling off a flawless production. Contact us anytime at 303-526-4900 or by emailing us here.

Relax. We got it.