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Subcontractors vs. EmployeesnnHowdy, this is David Groce, your Texas Tax and Law Man. Let’s talk about sub-contractors vs. employees.nnThe Biden Administration and the Bureaucrats running the DOJ, IRS, and DOL do not like small business owners. The truth is the government wants everyone who earns income in the U.S. to receive a W-2 because taxes are deposited monthly, if not weekly, you get to take no deductions, and all W-2 wages are subject to the payroll tax which is another 15.3% flat tax on your first $160,000 of income.nnRecently, the Department of Labor issued its new regulations which formally adopted the “total facts and circumstances” analysis to define who is an employee versus a subcontractor. This test focuses on six primary, but non-exhaustive factors:nn• Worker’s opportunity for profit or loss.n• Investments made by the worker and the employer.n• Degree of permanence of the work relationship.n• Nature and degree of control over performance of the work.n• Extent to which the work performed is an integral part of the employer’s business.n• Use of the worker’s skill and initiative.nnThis list simply rehashes the same thing every unemployment agency, the IRS, and the TWC has been saying for years. If you utilize sub-contractors in your business, keep in mind that a sub-contractor is hired to do a job, has flexibility to work for others, and is NOT your employee. nnHere are three great ways to protect yourself in case the DOL comes knocking:nn• Maintain an independent contractor agreement. n• Clearly define and classify independent contractors. n• Employees show up at your office, use your computers and equipment, work on your timeframe, and follow your specific instructions. n• You hire subcontractors for a particular job at a time, to do a set scope of work, on an agreed time and schedule.n• Hire independent contractors who use their own LLC or business entities. nnThese simple steps enable you to clearly illustrate that the sub-contractor is indeed a subcontractor.nnUntil next time, Adios.