July 2023 Client Profile

Valerie needs summer help at her kayak rental store in a busy beach town. But she doesn’t foresee needing these additional workers after the summer vacation crowds return home. Should she hire employees or use independent contractors for these few months?

Although Valerie may prefer to use contractors for her short-term staffing needs to avoid paying payroll taxes, she’ll likely be constrained to hiring employees. That’s because the IRS has clear rules defining employees and contractors.

Generally, an employee will work under Valerie’s supervision, direction and set hours. Further, her seasonal workers will be essential to running the business by taking care of customers.

Contractors tend to be professionals who don’t require supervision to do their work (think of computer consultants or electricians). And contractors can set their own schedules and control how they are paid, unlike employees who are paid according to the company’s pay schedule.

Client Profile is based on a hypothetical situation. The solutions discussed may or may not be appropriate for you.