Marvell

  TalentWave4Intuit



 Executive Login

 Purchasing Login

 




TalentWave4Marvell Home > Frequently Asked Questions

FAQ

Hiring Manager FAQs | Independent Contractor FAQs

Hiring Manager FAQs

Who is an Independent Contractor (IC)?

An independent contractor is a person or entity that renders a specific service or performs a specific assignment, for specified compensation and for specified results.   To qualify as an IC, the person or entity must be set up and operate as an independent business.   Make their services available to the general public and control or supervise the manner or means by which the work is performed. This differs from the employer-employee relationship in which the worker is paid wages and the company has the right to supervise and control the worker regarding what work will be done and how it will be done.   In order to report income, ICs receive a 1099 at year-end from the company.

  • Individuals who are clearly employees of other companies that withhold their payroll taxes, i.e., issue a W-2 at year-end, such as state licensed temporary agencies, third party payroll service providers, consulting and contracting firms.

  • Someone may be an IC for one company &/or project, but not necessarily for another.

  • The IRS considers many factors to determine IC versus employee status, such as:
    • the nature and degree of control over the performance of the work (who has control over when, where and how the work is performed),
    • the degree to which the contractor is engaged in an independent business with services available to the general public, or the extent to which the work performed by the contractor is the same as that performed by regular employees,
    • whether the contractor is free to set his/her own hours and location of work
    • the duration of the work relationship.

back to top


Why do companies need a compliance process?

The IRS and state taxing authorities perform thousands of company audits per year. It is a requirement in every tax audit that Independent Contractors are reviewed for classification. Government statistics show over 46% of contractors audited are found to be mis-classified. The consequences of this are huge, resulting in extensive administrative demands on our company resources, and more importantly, significant assessments in back taxes, fines, penalties, benefit(s) and back pay liabilities. Having a comprehensive compliance program in place virtually eliminates this risk.

back to top


Why is the company concerned about the status of my contractor?

  • If the company incorrectly hires an individual as an IC, the organization risks substantial penalties, back taxes, and potential benefit obligations. Persons responsible for entering into such improper agreements may also be held personally liable for penalty under the Internal Revenue Code.
  • Effective January 1, 2001, the California Employment Development Department requires companies to submit the names of all ICs paid or contracted to be paid $600 or more within a calendar year within 20 days of the payment or contract approval.

back to top


Why should I care about validating my contractor’s status?

So the individual gets paid and the company avoids the risk of liability for back taxes and penalties. This process not only validates IC status, it also sets up the individual as an approved vendor, so their invoices will be paid when submitted. Also, managers are responsible for complying with all company policies and procedures. Violations of company policies regarding ICs reflect adversely on a manager's judgment and performance and, because it puts the organization at risk of substantial financial liability, could subject the manager to disciplinary action.

back to top


What do I need to know before starting the process?

Thoroughly discuss and agree upon the terms of the engagement with the contractor. Areas to discuss include:

  •  Work location
  •  Terms in your standard contract
  •  Start & end dates
  •  How the project will be managed
  •  Let them know that they will need to provide proof that they are set up as a separate  business by government standards
  •  Advise the contractor that they will be asked to complete an on-line questionnaire

back to top


When do I start the IC Qualification process?

Individuals should NOT begin work until their IC status is validated, and their contract is signed by someone with appropriate contract signing authority. To ensure sufficient processing time, complete the on-line IC questionnaire and submit the required documents at least 7 days before the project is targeted to begin.

back to top


If I already had a contract with an IC, do I need to validate the status again?

Yes, if the individual begins a new assignment. An individual's status as an Independent Contractor may vary from project to project, and as other employment factors vary. An individual validated as IC for one project must again be validated for future projects.

back to top


What if the individual(s) work for their own company, corporation or partnership?

This is not determinative of IC status. Even if they bill through their own corporation, partnership or LLC, their IC status must be validated.

back to top


Do I still need to qualify a contractor who is incorporated or has worked as an independent contractor in the past?

Yes. Neither incorporation nor past qualifications guarantee an independent contractor classification. The government looks not only at the contractor’s business structure, but also at how the working relationship is managed for each particular project. For example, the same contractor may meet the requirements for a project that allows them to work at home and choose their own hours, but not for one that requires close management and team participation.

back to top


Who completes the on-line evaluation?

The hiring manager begins the process by completing their portion of the evaluation. Once completed, the contract worker is then directed to complete their portion.

back to top


How long will the qualifying process take?

If you have thoroughly discussed the project with the contractor it will take only 15 minutes to submit your questionnaire. Once your contractor has submitted their questionnaire, you will have your answer within 30 minutes.

back to top


What do I do if my contractor does not qualify as an IC?

Hire the individual as a payrolled professional through TalentWave’s Payroll Service.

back to top


Why is it such an issue to bring back former employees or returning retirees?

The taxing authorities have found a simple way to identify potentially misclassified workers, such as former employees or returning retirees. When a company issues a W-2 and 1099 tax form to the same worker in the same year this heightens the risk of misclassification, as well as increasing the risk of an audit.

back to top


Is it a conflict of interest for TalentWave to be performing the classification process and payrolling those contractors that do not qualify?

TalentWave is compensated for each service performed, therefore it doesn't matter which recommendation is issued. The online qualification process is fully automated and ensures that recommendations are completely objective and cannot be influenced by human judgment or opinion.

back to top


Independent Contractor FAQs

Who is an Independent Contractor (IC)?
Why do I need to complete the on-line IC questionnaire?

Why does an IC have to provide documentation?

If my IC status for this project is rejected, do I have other options?
What are the benefits of using TalentWave’s Professional Payroll Service?
Doesn’t the contractor make less money if they are payrolled?


Who is an Independent Contractor (IC)?

An independent contractor is a person or entity that renders a specific service or performs a specific assignment, for specified compensation and for specified results. To qualify as an IC, the person or entity must be set up and operate as an independent business and make their services available to the general public. They must also control or supervise the manner or means by which the work is performed. This differs from the employer-employee relationship in which the worker is paid wages and the company has the right to supervise and control the worker regarding what work will be done and how it will be done.   In order to report income, ICs receive a 1099 at year-end from the company.

Individuals who are clearly employees of other companies that withhold their payroll taxes, i.e., issue a W-2 at year-end, such as state licensed temporaty agencies, third party payroll service providers, consulting and contracting firms.

The IRS considers many factors to determine IC versus employee status, such as:

  1. the nature and degree of control over the performance of the work (who has control over when, where and how the work is performed),
  2. the degree to which the contractor is engaged in an independent business with services available to the general public, or the extent to which the work performed by the contractor is the same as that performed by regular employees,
  3. whether the contractor is free to set his/her own hours and location of work,
  4. the duration of the work relationship.

Someone may be an IC for one comapny &/or project, but not necessarily for another.

back to top


Why do I need to complete the on-line IC questionnaire?

The questionnaire will help determine if you can be classified as an independent contractor according to IRS regulations (and thus avoid serious penalties for misclassification), provide necessary financial reporting data, and establish prudent and consistent business practices.

back to top


Why does an IC have to provide documentation?

To appropriately demonstrate that the independent contractor is set up and operating as an independent business. In an audit, the burden of proof is on the company. The first thing an auditor asks for is evidence of the contractor’s independent status. Audits can go back three years, making it unlikely that the contractor is available or motivated to then provide this evidence. Rebuilding / recreating these files is not just costly, but almost impossible after the fact. TalentWave keeps the information in strictest confidence and releases it only for audit defense purposes

back to top


If my IC status for this project is rejected, do I have other options?

Yes. Enroll as a payrolled professional through TalentWave.

back to top


What are the benefits of using TalentWave’s Professional Payroll Service?

For the employer the benefits include mitigation of misclassification and co-employment exposures.

For the contractor the benefits include:

  1. Immediate medical and dental coverage, with a 50% contribution from TalentWave
  2. Complimentary life insurance and
  3. The opportunity to enroll in a 401(k) plan.
  4. Increased cash flow with
  5. Various payment options that include weekly, bi-weekly, monthly, one-time or pre-authorized payments,
  6. Direct deposit and much more.

back to top


Doesn’t the contractor make less money if they are payrolled?

The contractor ends up with the same if not greater disposable income because the employer’s contribution to taxes are paid by TalentWave. The contractor would normally be required to pay Self Employment Tax.

back to top


 



Copyright © 2005 TalentWave and Marvell. All rights reserved. All other trademarks
and copyrights are the property of their respective holders. Security/Privacy