When you start a business and want to expand it, you’ll probably need to hire additional help. Often, businesses owners believe hiring an independent contractor will reduce the business’ risk and paperwork while increasing the business’ capacity to serve its customers. Under Utah and federal law, regardless of what you call a person who works for or with your company, the actions of the hired person will define if they are an employee or contractor.
Contractors have their own business. Contractors provide their own tools, can have other clients, are licensed businesses, and have a separate place of business. A lawyer is a contractor in that I serve multiple clients at my discretion and as ethically allowed with conflicts of interest, I have my own office, I provide my own computer, printer, etc., and I maintain my own business license with the state and city.
Contractors are paid in lump sums or to complete a project. Unlike an employee, contractors are paid to complete a job or project. For example, my practice is paid in flat or hourly rates but the professional relationship ends when the project or court case is complete. Defining the “completed project” should be in any contract signed between a contractor and an entity. Whereas my employee will work for me into the indefinite future.
Contractors hire their own employees. A contractor can hire or fire their employees. If I am unsatisfied with a contractor’s work, I can end the relationship and work with another contractor. For example, I hired a contractor to build a fence. I have no control over who he hires unless I specify any legal limitations in the contract such as workers must be legally able to work on this job (age, citizen status, etc.).
Contractors meet project objectives. My fence builder was given specifications for the end project and he quoted me a price. But I am not managing the job, defining what should be done, providing tools, or giving a timeline beyond clarifying the completion date and payment rate. My employee is also given projects to complete, but I define the process, quality control, and tools.
Employees follow directions. Employees are told when and how to do a task. With my employee, I can give process directions for contacting clients, managing the office, and interacting with the public, opposing counsel, and service providers. Unlike the fence builder, I can ask my employee to be at the office working on my projects for exact periods of time with my equipment and under the premise of working for my company.
Additional questions? Ask Utah department of Workforce Services. They have offices in Loa, Panguitch, Junction, and Richfield. Their state-wide phone number is 866-435-7414. Your taxes pay for this service, so use it to answer employee/contractor questions and build your business.
If you would really like to get in the weeds of this topic, check out this handy flier.
Disclaimer. As always, my column is not legal advice, instead merely insight into the law and legal profession. If you have a general question about the law or legal profession, please email me at email@example.com or call 435.610.1431.
Now that the first round of new year’s resolutions have been broken, it’s time to make a few more resolutions with the hope they will stick. As my mother always says, anything is possible in January. So here are a few more ideas.
Change all of your passwords. Cybersecurity and identity theft is real, occurs every day, and is preventable. Being in the online era, so much valuable, sensitive information is online, whether you put it there or not. Protect your information. Make sure to use different passwords for each account and write down or manage your passwords so you can remember them later. Online resources can create password generators, password management, and other tools to protect your login information. Also put a note on your calendar to change your passwords every three months.
Start thinking about taxes NOW. This is almost as unpleasant as passwords, but even more necessary. If you can provide your accountant with your files or start organizing your files earlier than later, your accountant or yourself may find more tax deductions than prior years. By reducing the stress and time crunch of tax season, you can deal with this annual chore with more grace than grimaces.
Expunge old arrests and criminal charges. If you have ever been arrested, investigated, detained, or convicted of a misdemeanor or felony in the state of Utah and meet specific qualifications, you can have your record sealed. A sealed record is a court record that the public – and employers – cannot view or copy. Ask your attorney for more information or search on the Utah Courts website (utcourts.gov) to find out if and how to expunge your records.
Organize your business. January and February can be slower months for businesses. This sigh of relief and calm may reduce revenue, and it can provide time for other business tasks. City licensing fees, state licensing fees, and professional organization fees can be scheduled or paid. If you are a corporation, hold your annual meeting. Review your professional liability insurance policy. Consider renegotiating vendor contracts. Reflect on your last year of business and look for ways to increase revenue. Or you can take your much-needed break from the onerous tasks of business management and go on vacation so you are recharged and ready to go when you return.
Meet with a lawyer about that important legal issue. You know the one. You thought about it in November, but then Thanksgiving and the holidays came up without time to blink. Now is the time. Are you concerned about that boundary line? Want to start a new business but not sure where to begin? Thinking of hiring employees? Has your ex-spouse’s income changed? Do you need to get your estate in order? Your lawyer is refreshed from the holidays and has already, hopefully, created their own New Year’s resolutions.
Disclaimer: All materials in this article are prepared for general information purposes only to permit you to learn more about legal concepts. The information presented is not legal advice, is not to be acted on as such, may not be current, and is subject to change without notice.