Employees or Independent Contractors: Are MLMers?
Our economy was booming at this time last year.
We heard about bonuses and promotions rather than layoffs and bankruptcy.
However, determining whether you earned money as an employee or as an independent contractor has taken on a whole new meaning in Tax Year 2000 and beyond.
The combination of workforce layoffs, the exponential growth of home-based businesses, the industry's increasing reliance on temporary and contract workers, and the insecurity of "traditional employees" has resulted in a greater number of us becoming entrepreneurs and contract workers than ever before.
While there are many other types of home-based companies, this article concentrates on one of them-multilevel marketing schemes.
While considerable attention has been placed on some of these companies' legally dubious marketing tactics, we hear less about a far more significant issue confronting everyone involved in an MLM at tax time—MLM associates' job categorization or "status" when it comes to computing our taxes.
The correct response will decide whether you select the "refund" or "payment due" box on your tax return this year.
For anybody engaged in an MLM or other home-based company, not understanding the answer to this question may have serious repercussions.
Independent Contractor vs. Employee
A recent court decision held that anybody joining on as an associate or distributor with an MLM company is a contractor, not an employee of that firm.
If you joined an MLM in the last few years, your contract most likely specifies that you joined as an independent contractor and are not an employee of that MLM organization.
As a result, if you're one of the thousands of people who have become used to getting and submitting W-2 documents to calculate and report your taxes, you must exercise extreme caution.
Don't be shocked if you got a 1099 Form from an MLM you were formerly involved with.
Many of these companies have updated their accounting systems to comply with the legislation, and they are now issuing 1099 forms to all current and former partners and distributors.
Misclassification Can Result in Expensive Risks
The Independent Contractor Report's latest analysis of the companies and sectors most often engaged in IRS-related worker status or misclassification issues revealed the problem's breadth.
In hundreds of labor categories, it includes professionals and small-business owners, administrative employees, physicians and nurses, personal care aides, truck drivers, newspaper delivery messengers, and many more.
Surprisingly (to some), attorneys and accountants ranked first and second, respectively.
Questions to Ponder
As you file your taxes this year, consider two easy questions:
1) Did I work as an independent contractor, temporary, contract, part-time, or other "nontraditional" worker for the majority or all of the year?
2) Did I spend any time throughout the year running a small company of any size?
This includes working as an affiliate, distributor, or label for any multilevel or network marketing company.
If you answered "yes" to either question, you should consider obtaining expert assistance from a competent attorney and/or accountant to assist you in your calculations and avoid the significant cost of improperly completing your tax returns.
The "20 Common Law Factors Test" is still used by the IRS and our courts to determine whether you are an employee or an independent contractor.
It is also available on the IRS Web site, along with other helpful information to assist you in determining your tax status.
Our Network : MLM Software In
Jaipur | MLM Software in Uttar
Pradesh | MLM Software in Pune | MLM Software in
Mumbai | MLM Software in
Delhi | MLM Software in Bihar | MLM Software in
Himachal Pradesh | MLM
Software in Goa
www dot mlmsoftwarez dot in
Helplines : +91-92140-60999
Whatsapp : +91-92140-60999
Comments
Post a Comment