January 2006

INDEPENDENT CONTRACTOR

 VS EMPLOYEE

            As a home builder, you typically hire many independent contractors for various jobs.  Unlike wages paid to employees, you are not required to withhold payroll taxes or income taxes from payments made to an independent contractor.  However, the IRS monitors with a watchful eye the way you classify your workers.  To be sure the IRS doesn�t think your independent contractors are employees you should be clear on how they define an independent contractor vs an employee.

            The IRS defines an employee as someone who can be told what to do and also how to do it.  Distinguishing between a contractor and an employee is difficult.  To decide, review these categories:

  • Behavioral Control - whether or not you have the right to direct and                        control the worker.

  • Financial Control - whether or not you have the right to control the                     business aspects of the worker�s job.

  • Type of relationship - defines the worker�s dependence on the                          business.

Classifying a worker as an independent contractor or an employee simply requires common sense.  For example, an electrician hired to do electrical work in a house is an independent contractor.  They are not told what to do and they have a significant investment in their business.  On the other hand, a receptionist is an employee.  He or she is paid a wage from the business and the business has the right to tell the person how to do the job.  For purposes of workers compensation it is very difficult to prove a person is an independent contractor unless they truly are.

If you are still unsure about the difference between an independent contractor and an employee, visit the IRS website at www.irs.gov for more information.

---Article provided by PBA

 

 

 

MEMBERSONLY - PBA WEBSITE

To access the members only section of the PBA website.  First go the the PBA main page at  www.pabuilders.org.  Second, click the �member services� menu on the left. Third, It will ask you to log on with your user ID and password.   If you have not done this before, your user ID is also your association member ID number which is on the label of your Builder Magazine.  If you still can not find your association member ID call us at the EO�s office and we can lookup the number for you.  The following are items that you can find on the members only section of the PBA website.

Model Building Contract

The Pennsylvania Builders Association has available for free to all members a model Building contract. This sample agreement form is provided as a reference for members as they create their own contracts with their customers.  It is available in the members only section of the PBA website.

Stormwater

The Pennsylvania Builders Association has updated its online information about stormwater regulations to assist members in staying in compliance and avoiding the sting of fines.  Visit the PBA website members only section to get this information.

Realty Transfer Tax Hike

Proposals to increase the realty transfer tax and begin taxing construction and real estate services are no longer looming as legislators struggle to relieve the school property tax burden.  PBA members balked at these proposals and hundreds participated in two letter-writing campaigns to oppose bills that would make housing less affordable  while shifting the tax burden.  More details are available in the members only sections of the PBA website.

Plus Much Much More

- Uniform Construction Code updates move from Committee

- �Requirement to repair� bill to move ahead

 

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