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NH rules on Independent Contractors vs Employees

First, why do you care about whether your help is a sub or an employee? Because you can push the tax burden onto the contractor rather than deal with payroll and you can avoid having to pay workers compensation insurance on those contractors,  Or can you?

 

In a nutshell, here is what the state says:

In New Hampshire, the party you are HIRING is a subcontractor and NOT an employee if ALL of the following are TRUE:

1- The hired party possesses or has applied for a federal employer identification number or social security number

 

2- The hired party has control and discretion over the means and manner of performance of the work

 

3- The hired party has control over the time when the work is performed and the time of performance is not dictated by the employer. However, this shall not prohibit the employer from reaching an agreement with the person as to completion schedule, range of work hours, and maximum number of work hours to be provided, and in the case of entertainment, the time such entertainment is to be presented.

 

4- The hired party hires and pays the person’s assistants, if any, and to the extent such assistants are employees, supervises the details of the assistants’ work.

 

5- The hired party holds himself or herself out to be in business for themself or is registered with the state as a business and the person has continuing or recurring business liabilities or obligations.

 

6- The hired party is responsible for satisfactory completion of work and may be held contractually responsible for failure to complete the work, AND

 

7- The hired party is not required to work exclusively for the employer.

 

 

Are you confident the people you are hiring qualify as Independent Contractors? We deal with issues like this all the time and can give you some really good advice on how to survive a challenge. Let us help you get confidence today.

 

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Copyright 2014 by Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, a PASBA member accountant, located in Londonderry, New Hampshire, with more than twenty- five years experience on Federal and New Hampshire issues affecting small business, and specializes in keeping his clients OnTrack with bookkeeping, tax, and payroll services for a fixed monthly fee. Learn more about Steve’s exclusive SIX Step system developed for small businesses at www.appletreebusiness.com/map.

Taking advantage of employer tax benefits in your business

As a business owner in New Hampshire, make sure you’re getting these employer tax benefits benefits:

 

1) Dependent Care Benefits—If you incur childcare expenses so that you can work, you should check to see if your employer has a dependent care program. If dependent care benefits are provided by your employer under a qualified plan, you may be able to exclude up to $5,000 of child care expenses from your wages. 

 

2) Employer health care plans allow you to exclude the cost of insurance for you and your family from your wages.

 

3) If your NH employer has a 401(k) plan, you can elect to defer (pre-tax) a maximum of $17,500 for 2013. If you are 50 years or older, the maximum is increased to $23,000. These plans are especially beneficial when the employer provides a matching contribution. 

 

3) Flexible Spending Accounts—Some employers provide flexible spending accounts, which allow an employee to make contributions on a pre-tax salary reduction basis to provide coverage for up to $2,500 of medical and dental expenses. 

 

4) Tax-Free (income excludable) Employee Fringe Benefits—If the employer provides them, the law allows an exclusion from the employee’s taxable income for the following benefits:
 

(1) The cost of up to $50,000 of group-term life insurance.
 

(2) $245 (in 2013) per month for qualified parking.

 

(3) $245 (in 2013) per month for transit passes and commuter transportation.

 

(4) $20 per month for bicycle commuting expenses.

 

Are you getting all the tax free benefits you can out of your NH business? To learn more, check out Appletree Business Services’ Business Financial Confidence Map.

 

If you found this article useful, please do not keep this a secret. Share it with a friend.

 

Copyright 2014 by Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, a PASBA member accountant, located in Londonderry, New Hampshire, with more than twenty- five years experience on Federal and New Hampshire issues affecting small business, and specializes in keeping his clients OnTrack with bookkeeping, tax, and payroll services for a fixed monthly fee. Learn more about Steve’s exclusive SIX Step system developed for small businesses at www.appletreebusiness.com/map.