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January 16, 2020

Liquid Helps You With Independent Contractor Compliance

Liquid has the features you need to stay compliant.

Liquid helps you stay compliant with independent contractor rules and regulations

Liquid News Compliance

Independent Contractor Compliance. You know it’s essential to classify your independent contractors correctly. Reports have shown that 10-20% of independent contractors are misclassified. And misclassification leaves your business open to liabilities and penalties due to violations of tax and employment laws.

Hiring independent contractors / freelancers increases flexibility and reduces labor expenses (i.e., training and tax costs). Many behavioral, financial, and relationship control factors determine whether you are actually hiring a W2 employee or a 1099 independent contractor.

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Here are some Liquid features that help you with independent contractor compliance.

Behavioral Factors

  • Liquid makes it easy to create projects with specific timeframes.
  • With Liquid, you can effortlessly agree to project SOWs with your freelancers.
  • Creating projects in Liquid makes it clear that your freelancers are being evaluated solely on the end products or services provided.
controlling your independent contractors puts your compliance at risk. Learn how Liquid helps.

Financial Factors

  • With Liquid, you can quickly agree to specific hourly rates or project-based fees for each SOW.

Relationship Factors

  • Liquid simplifies signing independent contractor agreements with your freelancers and vendors.
  • Liquid encourages contractors to use an EIN (versus SSN), which helps make it clearer that you are using a 1099 worker versus someone you should be hiring as a W2 employee.
  • Liquid helps with the consistent treatment of your outside vendors in a scalable way. 
  • Using Liquid allows you to separate the management of your full-time employees from your outside contractors and vendors.
  • Liquid allows your freelancers to quickly create SOWs with other clients, which reinforces their independent contractor status.
Liquid helps you with independent contractor compliance

This separation is similar to how companies have adopted the use of third-party companies to source and contract with 1099 workers. And it relates to the ABC test: if you have independent contractors on the same systems that are used to manage employees, you are more at risk of violating the ABC test.

If you are working with properly classified 1099 independent contractors and/or vendors, Liquid helps you stay compliant. Sign-up for Liquid beta today!

Category: Liquid News Compliance

Updated: January 16, 2020

Quick note: This is not to be taken as tax advice or legal advice or payroll advice. Since tax rules and laws change over time and can vary by location and industry, consult a CPA / tax advisor and/or attorney for specific guidance.

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