Don’t get ahead of yourself

This past week I had to disappoint an aspiring specialist that supported a detail for me.  When he received his check for the services he was a bit upset that the check was written in his name and taxes had been taken out for the government entities that oversee all of us.  When he called and asked why the check was not written in his “company” name I had to remind him that his catchy company name was not licensed in the state that he provided the services in.  Individually he had all the appropriate licenses to operate however the company name that he provided was not.

I have blogged about this before but I wanted to reiterate it again to the new subscribers of the blog.  In order for a company to operate or provide services for BPI Security it MUST be licensed to provide the specific services you are doing for me.  A catchy name and an EIN number [Federal Employer Identification Number]  is enough to open a bank account and enough for the IRS to recognize you however that company must be licensed in order to provide services under my flag.  Absent that license you will work and be paid as a licensed individual.

I would also recommend that each of you look up the definition of an independent contractor versus an employee.  As a company owner or service provider that hires indivuduals to perform specific duties there are some restrictions under the independent contractor definition that conflict with how we require our people to work.

“People such as doctors, dentists, veterinarians, lawyers, accountants,  contractors, subcontractors, public stenographers, or auctioneers who are in an independent trade, business, or profession in which they offer their services to the general public are generally independent contractors.  However, whether these people are independent contractors or employees depends on the facts in each case. The general rule is that an individual is an independent contractor if 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.

You are not an independent contractor if you perform services that can be controlled by an employer (what will be done and how it will be done). This applies even if you are given freedom of action. What matters is that the employer has the legal right to control the details of how the services are performed.”

Service providers aka Security Company owners need to be clear on this and those portions of the IRS definition that I have highlited in BOLD. Under this definition you are either an employee or sub-contracted company.  The gray area is not worth playing around in.

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