Understanding Contractor Pay
Contractors are rapidly becoming apart of today’s modern workforce. Finding the right contractors and leveraging their expertise can be a challenge. They aren’t technically apart of your company so there are usually a different set of rules that apply to them. It can be difficult to understand all the do’s and don’ts of adding contractors to your team. So we have decided to put together something that will help you tackle this challenge.
Call references as you would with any hire, or for a bigger or more sensitive project, run a background check.
If an independent contractor is organized as a business, you can check with the Better Business Bureau to make sure no complaints have been filed against this business. Review sites and social media like LinkedIn can also be your friend here if the candidate has been contracting for a while.
Even the most simple relationship should have a contract signed by both sides.
After Hiring Paperwork
If you are a Gig Wage customer, we’ve got you covered. If you aren’t, start by requesting the candidate go to irs.gov and download a W-9 to fill out and return to you. Collect a copy of the person’s resume (for your own protection and to verify in case of an audit) and save a double-executed copy of the contract. Even the most simple relationship should have a contract signed by both sides. Gig Wage prompts both sides to complete these steps and saves your documents for easy reference, delivering convenience and confidence to your independent contractors.
Keep Contractors Happy
If the contractor has done his/her job, ensure fast payment. A happy contractor always does better work, returns to work for you again, and brings in good references as future candidates. The more transparency around payment amounts, timing, and any deductions or processes, the more confidence your independent team will have. Lack of clarity around payment is a major reason that employees give up on independent contracting or never try it in the first place.
Timely and kind communication builds trust and includes contractors in your company mission.
Contractors can depend a lot on others in the company as they are not there every day. Don’t hold them up. Timely and kind communication builds trust and includes contractors in your company mission — once again, empowering them to do the best work. Lack of communication can make contract work very demotivating, and create the “revolving door” of resignation without either party understanding why. Make it easy to work for you, with information and access.
Check the Work
We all thrive on feedback in the workplace, to get better at what we do and feel a sense of accomplishment. Take the time to let contractors know their work has been reviewed and meets expectations. If you don’t check the work and let them know, the contractor will assume you are happy and move on. They only know what you tell them.
You must keep track of payments you make to independent contractors each year. You do not need to withhold FICA taxes (Social Security and Medicare tax) from these payments. For each independent contractor you paid $600 or more during the year, you must report the total amount paid on Form 1099-MISC and give a copy of this form to the contractor for his/her income taxes by January 31.
Written byGig Wage