Dogs, Little Kids and Freelancers All Love ?
Dogs, Little Kids and Freelancers All Love ? – one of my favorite post tax season riddles.All three are cute and adorable to some, and disorganized, frustrating circus to others. All three share “potty training issues”, and are prone accidents until the day that structure and rules enter their lives. For once we can skip the “poop lessons” that kids and dogs learn and focus on freelancers.
As a CPA with extensive experience with professional services, I can attest to the analogy being accurate. When an inexperienced freelancer bring their tax return information, what you get is very similar to a dirty diaper in many cases.
The disorganization creates a nightmare for the freelance, their tax person, and most important THE businesses that pay them. We could [and ultimately will] devote a separate post to a review of the all important Independent Contractor vs. Employee classification criteria.
- For an overview of the issue on a global perspective – Independent Contractor Versus Employee Status: A Global Perspective is an excellent article.
- The IRS criteria are summarized in Independent Contractor (Self-Employed) or Employee?
Rather than dwell on theory, let identify some simple yet absolute rules that can greatly simplify life for everyone involved. We are going to assume that everyone that should be an employee fills out a W-4 [or the non-US equivalent] and is put on regular payroll with taxes withheld from wages [PAYE if you will]. The independent contractors should be subject to a short list of absolute rules [without exception]. We can use the US rules to illustrate –
- Any contractor that wishes to get paid must submit three items prior to getting paid…and this is the point where you can hold their attention. [If they don’t submit the items they don’t get paid. – PERIOD]
The first two items are relatively easy to comply with….as they are a one time task. The invoicing [and contractor record keeping has always been an on-going nightmare, until now. In a stroke of genius, accounting software Xero.com has released an elegant solution to the problem – Xero Touch. [There will be plenty of opportunity for demonstration and discussion of what Xero Touch does.
The beauty of it is that
- The application is mobile centric. You can try it free [link]
- aBIZinaBOX advises hundreds of professional service firms and freelancers. This is the first post in a series focused on helping freelancers and the agencies they work with NOT BECOME ACCOUNTANTS….that way there is accounting work for geeks like us.
- If you are ready to add treat your freelancers like small children and dogs [that didn’t come out exactly right] it’s time to START THE DISCUSSION.