employee

I hope that I will be able to report soon that this is no longer a problem. A bill has already passed the House and is expected to quickly move through the Senate, with Presidential approval fixing this problem. What is the problem? Under the current law, written back when cell phones were those big Motorola units with fixed antenna and cost $4,000 or more, a cell phone is considered a perk. If your business or employer provides it for you, you pay tax, unless you follow a list of pretty onerous rules.

I get this question a lot from people looking to form LLCs, especially when there’s just a single owner, or only 1-2 owners. There are some neat things you can do with a manager-managed LLC … if you know the tricks!

One of the hot topics on the First Class Lounge Forum this week has been the question of whether the person we might have working for us should be an independent contractor or employee. There are actually two sides to this question. If you have an independent contractor working for you, you don’t need to cover them for payroll taxes or benefits.

But, here’s the trick. You don’t get to choose whether the person working for you is an independent contractor or employee. The IRS chooses and sometimes they change their mind.