Independent contractors are increasing in today’s workforce, and with this increase comes liabilities from the one mistake on payroll you never want to make: employee misclassification.
Employers at times knowingly or unknowingly misclassify employees as independent contractors. This misclassification causes the employer to avoid paying benefits, overtime, taxes, and even workman’s compensation. If this happens, trouble—with the state and federal government—and hefty penalties follow. When employees complain to the United States Department of Labor about being misclassified, the state and federal government respond with a number of unwanted penalties.
Over time, misclassification costs employers a lot of money, time, reputation, and unnecessary trouble due to mistakes or misunderstandings surrounding the proper classification and tax regulations. Independent contractors differ from full-time employees in monetary compensation, benefits, paid vacation, and sick leave—which often makes them a budget-friendly choice for small businesses.
The painful results of employee misclassification on the business’s reputation
When lawsuits resulting from misclassification are brought to the public’s attention, bad publicity damages the business’s once good reputation. As you know, once a reputation is publicly blemished, it is difficult to overcome the results. The effects could be seen monetarily for years to come.
Misclassification may result in steep fines and back payments
Whether misclassification is intentional or unintentional, it results in penalties proportionate to the particular mistake. Employers are charged a percentage of employee wages, Social Security, and Medicare contributions. And when the misclassification is intentional, criminal penalties and even prison time can result.
Employees who were misclassified may qualify for benefits
From overtime, paid time off, and health coverage—to sometimes even 401(k) contributions, employees who file a complaint with the United States Department of Labor may be eligible for appropriate compensation for their work.
It’s time to avoid costly mistakes and simplify your payroll
At Shockley Bookkeeping, we believe paying your employees should be easy. That’s why we offer:
- Proper payroll setup
- ACH direct deposits
- Management of payroll forms
- Calculation of payroll taxes and insurance
- Accurate and on-time payroll
Our team of professionals with over 50 years of combined experience has helped hundreds of small businesses just like yours avoid the ongoing stress of payroll. Shockley Bookkeeping makes sure your payroll is set up and generated accurately—including all the quarterly tax forms—so you avoid tax mistakes.
It’s no surprise to you as a small business owner that payroll is complicated. When your business reaches a certain level of success, payroll can become the dreaded task that can drain your time and energy—every pay period, every quarter.
Affordable payroll services with big returns
Our Broken Arrow payroll services are relatively inexpensive, yet their payback is extensive.
The peace of mind you get from knowing your taxes, insurance, and other deductions are not miscalculated will lower your stress level. We handle direct deposits and quarterly tax forms so you have more time to focus on growing your business. That means you’ll better serve your customers, offer better products, and plan properly for your growing business.