How do I pay for occasional labor?

Question

I'm starting a business and I have a friend that will be helping me out. She has no ownership of the business and will be working at her leisure (essentially) but not often enough, I feel, for me to go the independent contractor route. That would probably be a hardship for her as well to have to report self-employment taxes. How do I pay her properly and indicate that expense properly?

Brad H · Accepted Answer

If you pay her by the hour, you have to treat her as an employee. That means you have to set up an account with your state employment agency and pay employment taxes on her with a quarterly tax report. You are also required by law to take federal withholding taxes out of her check as well as Social security and medicare taxes. You also have to file a quarterly report with the I.R.S. and pay federal employment taxes. You have to keep detailed time records as well.

There's no such thing as "occasional labor." If you have any control or direction in her job performance as to what she does and how she does it, legally, she is an employee and cannot be classified as anything else.

You can contact your state employment agency for assistance.

There's no such thing as "occasional labor."  If you have any control or direction in her job performance as to what she does and how she does it, legally, she is an employee and cannot be classified as anything else.

You can contact your state employment agency for assistance.

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How do I pay for occasional labor?

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