Independent Contractor Compliance Blog - by Collabrus™

Question(s) of the Week-Do you know:

1. How many IC’s are currently providing services in your company?

2. How much your IC’s are costing you?

3. How long a specific IC has worked for you?

4. Is a specific IC meeting your expectations-providing all the deliverables?

5. Will the IC status stand up under a government tax audit?

I’ve met with literally hundreds of CEO’s, CFO’s, HR Directors, Procurement VPs and others who could not answer these questions about the IC’s in their company. Why? They had not established system for control and accountability in their consultant engagement process that was currently being followed.

Is Your Company at Risk?

If you are using a significant number of IC’s in your company and can not answer these questions you are in a high risk category for:

• Misclassification civil lawsuits
• Misclassification tax assessment
• Misclassification government enforcement actions
• Paying too much for your contractors and consultants
• Not getting your money’s worth from consultants and contractors
• Keeping consultants around after they are no longer providing you a valuable service

An IC Compliance system should provide answers to all of these questions and more.

Specifically your system should:

• Insure IC’s are properly classified before the project begins
• Identify and track all IC’s currently providing services for you
• Provide you the length of time the IC has been engaged
• Provide you with the cost of the project as a running balance and tell you when it is in danger of going over budget
• Inform you if the consultant is meeting the deliverables
• Tell you if the project is on schedule
• Periodically revisit the working relationship to guard against status drift (when a legitimate IC slowly evolves into an employee and you now have a misclassified worker)
• Provide documentation to prove you did it right two or three years from now when a challenge is most likely
• Should be efficient and easy to use

If your system doesn’t do all of this, it is time for you to call an expert.