Frequently Asked Questions Questions: How long should I retain my business and personal records? Should I treat my hired staff as employees or independent contractors? Answers: Document Retention Document retention and destruction policies are more important than they may seem. Both businesses and individuals are required to keep certain documents for various periods of time. You must keep documents substantiating the amounts and positions taken on tax returns, payroll records for social security and workers' and unemployment compensation purposes, and you should certainly keep records of asset purchases such as for homes and other investments. All of this brings about the question as to how long certain records should be kept and what you should do with them after this period. Unfortunately there are no universal rules to cover all of the options, but we have compiled our list of recommendations using known requirements such as those from the Internal Revenue Service and the State of Florida. After the recommended storage periods the records should be destroyed by whatever secure means you choose. Click HERE to view our Document Retention Schedule Back to Questions/Top Employee vs. Independent Contractor - Ten Tips for Business Owners As a small business owner you have many decisions to make regarding your business. One of these is, “Should I treat my hired staff as employees or independent contractors?” This decision will impact how much taxes you pay and the amount of taxes you withhold from their paychecks. Additionally, it will affect what additional cost your business must bear such as the cost of processing payroll or workers’ compensation insurance. There is also a difference as to what documents and information they must provide to you, and what tax documents you must give to them. It may seem easier to have independent contractors then to hire employees but the decision isn’t as easy as you might think. The Internal Revenue Service has many rules regarding employee vs. independent contractor status and without good advice you can run afoul of these rather quickly. In order to help business owners the IRS frequently releases tips to make compliance easier. The tips below represent the IRS’ most recent information in this regard. Three characteristics are used by the IRS to determine the relationship between businesses and workers: Behavioral Control, Financial Control, and the Type of Relationship.  Behavioral Control covers facts that show whether the business has a right to direct or control how the work is done through instructions, training or other means.  Financial Control covers facts that show whether the business has a right to direct or control the financial and business aspects of the worker's job.  The Type of Relationship factor relates to how the workers and the business owner perceive their relationship. If you have the right to control or direct not only what is to be done, but also how it is to be done, then your workers are most likely employees. If you can direct or control only the result of the work done -- and not the means and methods of accomplishing the result -- then your workers are probably independent contractors.  Employers who misclassify workers as independent contractors can end up with substantial tax bills. Additionally, they can face penalties for failing to pay employment taxes and for failing to file required tax forms.  Workers can avoid higher tax bills and lost benefits if they know their proper status. Both employers and workers can ask the IRS to make a determination on whether a specific individual is an independent contractor or an employee by filing a Form SS-8 – Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding – with the IRS. You can learn more about the critical determination of a worker’s status as an Independent Contractor or Employee at IRS.gov by selecting the Small Business link.  Additional resources include IRS Publication 15-A, Employer's Supplemental Tax Guide, Publication 1779, Independent Contractor or Employee, and Publication 1976, Do You Qualify for Relief under Section 530? These publications and Form SS-8 are available on the IRS Web site or by calling the IRS at 800-829-3676 (800-TAX-FORM). * Taken from IRS Tax Tip 2009-20 http://www.irs.gov/newsroom/article/0,,id=173423,00.html Back to Questions/Top   Independent Member:   Facebook                      LinkedIn                  Twitter   Telephone:  (239)939-2233                       Email:  accting@hughessnell.com FAX:  (239)939-0554 1470 Royal Palm Square Boulevard Fort Myers, FL 33919  IRS Circular 230 Disclosure:  In order to ensure compliance with IRS Circular 230, we must inform you that any U.S. tax advice contained in this transmission and any attachments hereto is not intended or written to be used and may not be used by any person for the purpose of (i) avoiding any penalty that may be imposed by the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matter(s) addressed herein. 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