Article Posted on 08/27/2019
With harvest planning underway your operation may be taking on seasonal workers. Here are some questions we get from our clients:
Question: Will this be on a 1099 or W-2?
A 1099 is used for an independent contractor and a W-2 is used for an employee. How do you know which you have? It is all about control. Who is in control of the work and expenses, the employee or the employer. The more control the employer has the more likely you have an employee. In this IRS publication you can get a feel for the IRS's viewpoint (get it here https://www.irs.gov/pub/irs-pdf/p1779.pdf)
Question: What paperwork do I need?
With an employee you need to have them complete a W-4 and I-9.
- The W-4 is an IRS document available from irs.gov. The purpose of this form is to obtain the correct information to withhold income taxes.
- The I-9 is an USCIS document available from uscis.gov. The purpose of this form is to facility employment eligibility verification of a new hire.
Also review any benefits you offer to evaluate if your hire will be eligible for anything you already offered.
With an independent contractor you need to have them complete a W-9. This form gathers the necessary information to complete the 1099. It is available at irs.gov
Question: How do I handle the taxes with an employee?
You will want to work with your accountant to setup a system that works for your operation for withholding and remitting taxes. It is important forms and payments are made on time and your employees are paid the correct amount.
What are other considerations:
Give this person an overview of the work they will be doing and what your expectations are. Such as:
Where they should report and what time the day starts.
How do they track time and how do they get paid.
How do you communicate a no work day due to weather concerns.
How are meals and breaks handled.
A map of farm locations.
Make sure to ask if they have any questions for you.