Getting ready to bring on help for our growing Texas utility audit practice. Been going back and forth on whether to hire as employee or use subcontractors. Obviously there are cost differences but wondering about the legal implications. Anyone dealt with worker classification issues in this business?
Subcontractor vs employee - legal/tax implications?
Steve, I'd be very careful with the subcontractor route. Wisconsin labor department is pretty strict about classification. If they're working primarily for you, using your tools/software, following your processes for MG&E audits, they're probably employees legally regardless of what you call them.
Linda's right to be cautious. The IRS has pretty clear tests - control over how work is done, financial aspects, relationship type. In our business, you're usually directing exactly how the PGE audits should be conducted. Hard to argue that's true independent contractor status.
I use true subcontractors for overflow work - other audit firms who can take entire Duke Energy projects from start to finish. But for people working in my office using my systems? Those are employees. The payroll costs are worth avoiding the legal headaches.
Thanks for the reality check everyone. Sounds like the subcontractor savings aren't worth the risk for what I'm planning. Better to do it right from the start with proper payroll, workers comp, etc. CenterPoint Energy audits are steady enough to support the overhead.
One follow-up - any recommendations for payroll services that work well for small audit businesses? Looking for something that handles the basics without breaking the bank.