Do Your Homework Before Hiring, Advises Victory State Bank
STATEN ISLAND, N.Y. – As the local economy improves, an increasing number of Staten Island businesses will consider hiring additional help.
Victory State Bank believes it is essential for business owners to study their options before bringing workers on board.
Not doing so may lead to conflict with IRS requirements.
If you are a business owner hiring or contracting with other individuals to provide services, you must determine whether the individuals providing services are employees or independent contractors.
“Generally, you must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. You do not generally have to withhold or pay any taxes on payments to independent contractors,” according to the IRS.
It is critical that business owners correctly determine whether the individuals providing services are employees or independent contractors.
The IRS, for example, explains: “Under common-law rules, anyone who performs services for you is your employee if you can control what will be done and how it will be done. This is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed.”
On the other hand, an individual service-provider is defined as an independent contractor if, as a general rule, the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. The earnings of a person who is working as an independent contractor are subject to Self-Employment Tax.
To learn more about tax and financial implications of hiring, log onto the IRS Web page “Independent Contractor (Self-Employed) or Employee?” at http://www.irs.gov/businesses/small/article/0,,id=99921,00.html.
About Victory State Bank:
VSB Bancorp, Inc. (NASDAQ: VSBN) is the one-bank holding company for Victory State Bank. As Staten Island, N.Y.’s only community-based commercial bank, Victory State Bank operates five full-service locations on the Island: The main office in the community of Great Kills, and branches in the communities of West Brighton, St. George, Dongan Hills and Rosebank. For additional information, Victory State Bank may be reached at 718-979-1100 or visited online http://www.victorystatebank.com .