If you treat employees as independent contractors and fail to withhold taxes the IRS can reclassify them and assess potentially crippling retroactive penalties. There are other consequences too.

Are you a small business owner? Do you have any “independent contractors”? Really? Then, watch out! The IRS is looking for revenue. Surprised? Don’t be. If you use independent contractors, then you might need to exercise a bit more diligence. Why, the IRS may consider them to be “employees” masquerading in a tax-cheating disguise. It’s quite common for small business owners to rely on independent contractors, especially in lean times. And, from the perspective of the IRS, the difference can be huge in tax and legal terms. Why? An employer doesn’t have to withhold taxes or pay any benefits (instead,…

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