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March 18, 2021

Q: What are the State Compliance Requirements for Paying and Hiring Independent Contractors and Freelancers?

Learn about the compliance requirements of each state for reporting the hiring of independent contractors and freelancers.

Ask Liquid: What are the State Compliance Requirements for Paying and Hiring Independent Contractors and Freelancers?

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Liquid helps you with independent contractor compliance in the United States and permanent establishment risk overseas. But you may not know that each state has its own rules and regulations related to freelancers and independent contractors. For instance, California AB5 has affected California companies as well as companies in any state that work with California freelancers and independent contractors. And FIFA applies to companies located in New York City as well as organizations that work with independent contractors and freelancers in New York. 

While most states don’t have reporting requirements for reporting when you’ve engaged with or paid an independent contractor, there are many that do. For example, if you are working with contractors, freelancers, and vendors in California, you are probably filing IRS Form 1099 (or IRS Form 1099-NEC, to be specific) for payments made. But have you filed form DE 542 Report of Independent Contractor(s) with the California Employment Development Department (EDD)? There are many other states and US territories that have similar reporting requirements.

What is the purpose of Independent Contractor / Freelancer Reporting Requirements?

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Generally, states match new-hire reports against their child support records to locate parents, establish a child support wage-withholding order, or enforce an existing order. Employers are required to report data on a new hire within 20 days of remuneration for work performed. 

In some states, this reporting is limited to W-2 employees (full-time, part-time, and temporary employees), but in other states, this also includes independent contractors and freelancers. At the time of this writing, federal law does not require this reporting for independent contractors. 

Generally, the information submitted about independent contractors is used to increase child support collection by helping to locate parents who are delinquent in their child support obligations. Reports show that the New Hire Reporting Program, together with income withholding, has resulted in tens of millions of increased support dollars for children. 

What are the Independent Contractor / Freelancer Reporting Requirements in my State or US Territory?

Here’s what we know, but be sure to check with your attorney and examine your own state regulations and your contractors’ states’ regulations as they may have changed. Any changes could result in potential legal liabilities as well as financial penalties for you and your company.

Alabama Independent Contractor / Freelancer Reporting Requirements

At the time of this writing, there are no specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in Alabama. If you are located in Alabama or are working with contractors located in Alabama, you will want to check the state website and your attorney to see if anything has changed.

Go back up to view the complete list of US states and territories.

Alaska Independent Contractor / Freelancer Reporting Requirements

At the time of this writing, there are no specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in Alaska. If you are located in Alaska or are working with contractors located in Alaska, you will want to check the state website and your attorney to see if anything has changed.

Go back up to view the complete list of US states and territories.

American Samoa Independent Contractor / Freelancer Reporting Requirements

At the time of this writing, there are no specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in American Samoa. If you are located in American Samoa or are working with contractors located in American Samoa, you will want to check the state website and your attorney to see if anything has changed.

Go back up to view the complete list of US states and territories.

Arizona Independent Contractor / Freelancer Reporting Requirements

At the time of this writing, there are no specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in Arizona. If you are located in Arizona or are working with contractors located in Arizona, you will want to check the state website and your attorney to see if anything has changed.

It is worth noting that in Arizona, employers may confirm the independent contractor relationship by having workers sign declaration forms — Declaration of Independent Business Status (DIBS) forms — that “create a rebuttable presumption that an independent contractor relationship exists.” 

Go back up to view the complete list of US states and territories.

Paying Freelancers and Vendors?

Our customers report that using Liquid allows them to put off hiring an Operations Manager and/or Bookkeeper.

    Arkansas Independent Contractor / Freelancer Reporting Requirements

    At the time of this writing, there are no specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in Arkansas. If you are located in Arkansas or are working with contractors located in Arkansas, you will want to check the state website and your attorney to see if anything has changed.

    Go back up to view the complete list of US states and territories.

    California Independent Contractor / Freelancer Reporting Requirements

    According to the EDD’s website, you are required to file a form DE 542 (Report of Independent Contractor(s)) online or via paper forms if you hire an independent contractor and the statements below apply:

    • You are required to file a Form 1099-MISC for the services performed by the independent contractor.
    • You pay the independent contractor $600 or more OR enter into a contract for $600 or more.
    • The independent contractor is an individual or sole proprietorship.

    Additionally, form DE 542 must be filed within 20 days of either making payments of $600 or more or of entering into the contract, in any calendar year (whichever is earlier). Report each independent contractor once each year. If either the contract amount or amount paid includes the cost of parts or materials, that cost is to be included in determining whether the service-provider has been paid $600 or more.

    If the independent contractor is a corporation, general partnership, limited liability partnership or a limited liability company, then the business is not required to file the report. Businesses who don’t have employees and are not registered with the EDD are not required to register and receive a California employer payroll tax account number solely for the purpose of reporting independent contractor service-providers. These EDD-registered businesses must complete the DE 542 using their Social Security or federal employer identification numbers.

    Managing Freelancers and Vendors?

    Our customers report saving 20 hours per month (on average) when they use Liquid’s complete contractor and vendor management system.

      If the proper forms are not filed with EDD, it can result in penalties being assessed to the business. If the report is filed late, EDD may impose a penalty of $24 for each failure to report. If the failure to report is found to be intentional or if the report is falsified, a penalty of $490 may be charged.

      If you are located in California or are working with contractors located in California, you will want to check the state website and your attorney to see if anything has changed.

      Go back up to view the complete list of US states and territories.

      Colorado Independent Contractor / Freelancer Reporting Requirements

      At the time of this writing, there are no specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in Colorado. If you are located in Colorado or are working with contractors located in Colorado, you will want to check the state website and your attorney to see if anything has changed.

      It is worth noting that Colorado has some additional requirements for what must be included in contracts with freelancers and independent contractors. 

      The contract must contain a disclosure, in type which is larger than the other provisions in the document or in bold-faced type or underlined type, that the independent contractor is not entitled to unemployment insurance benefits unless unemployment compensation coverage is provided by the independent contractor or some other entity, and that the independent contractor is obligated to pay federal and state income tax on any moneys paid pursuant to the contract relationship. 

      In addition, there is a group of clauses that the contract must also include to create the presumption of an independent contractor relationship in the state of Colorado.

      Go back up to view the complete list of US states and territories.

      Connecticut Independent Contractor / Freelancer Reporting Requirements

      Businesses are required to report specific independent contractor information when:

      • Paying the independent contractor $5,000 or more in a calendar year and you are required to file a Form 1099 for the services performed, and
      • The independent contractor is not themselves registered with the Connecticut Department of Labor for unemployment insurance tax purposes or are not employees of a registered employer.

      This reporting can be done online or via a paper Form CT-W4.  If you are located in Connecticut or are working with contractors located in Connecticut, you will want to check the state website and your attorney to see if anything has changed.

      Go back up to view the complete list of US states and territories.

      Delaware Independent Contractor / Freelancer Reporting Requirements

      While government agencies must report independent contractors they hire, all other employees may provide the same information on their independent contractors and freelancers if they choose. 

      If you are located in Delaware or are working with contractors located in Delaware, you will want to check the state website and your attorney to see if anything has changed.

      Go back up to view the complete list of US states and territories.

      District of Columbia Independent Contractor / Freelancer Reporting Requirements

      At the time of this writing, there are no specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in the District of Columbia. If you are located in DC or are working with contractors located in DC, you will want to check the state website and your attorney to see if anything has changed.

      Go back up to view the complete list of US states and territories.

      Florida Independent Contractor / Freelancer Reporting Requirements

      At the time of this writing, there are no specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in Florida. If you are located in Florida or are working with contractors located in Florida, you will want to check the state website and your attorney to see if anything has changed.

      Go back up to view the complete list of US states and territories.

      Georgia Independent Contractor / Freelancer Reporting Requirements

      At the time of this writing, there are no specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in Georgia. If you are located in Georgia or are working with contractors located in Georgia, you will want to check the state website and your attorney to see if anything has changed.

      Go back up to view the complete list of US states and territories.

      Guam Independent Contractor / Freelancer Reporting Requirements

      At the time of this writing, there may be specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in Guam. If you are located in Guam or are working with contractors located in Guam, you will want to check the state website and your attorney to get more information.

      Go back up to view the complete list of US states and territories.

      Download Liquid’s Employee (W2) versus Independent Contractor (1099) Compliance Checklist as a handy reference when evaluating your relationships with freelancers.

      Hawaii Independent Contractor / Freelancer Reporting Requirements

      At the time of this writing, there are no specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in Hawaii. If you are located in Hawaii or are working with contractors located in Hawaii, you will want to check the state website and your attorney to see if anything has changed.

      Go back up to view the complete list of US states and territories.

      Idaho Independent Contractor / Freelancer Reporting Requirements

      At the time of this writing, there are no specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in Idaho. If you are located in Idaho or are working with contractors located in Idaho, you will want to check the state website and your attorney to see if anything has changed.

      Go back up to view the complete list of US states and territories.

      Illinois Independent Contractor / Freelancer Reporting Requirements

      At the time of this writing, there are no specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in Illinois. If you are located in Illinois or are working with contractors located in Illinois, you will want to check the state website and your attorney to see if anything has changed.

      Go back up to view the complete list of US states and territories.

      Indiana Independent Contractor / Freelancer Reporting Requirements

      At the time of this writing, there are no specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in Indiana. If you are located in Indiana or are working with contractors located in Indiana, you will want to check the state website and your attorney to see if anything has changed.

      Go back up to view the complete list of US states and territories.

      Paying Freelancers and Vendors?

      Our customers report that using Liquid allows them to put off hiring an Operations Manager and/or Bookkeeper.

        Iowa Independent Contractor / Freelancer Reporting Requirements

        Iowa law requires employers to report all newly hired employees or independent contractors within 15 days of the employee’s start date. This filing can be submitted online or by submitting a paper form via mail. Iowa law requires a payor of income with 200 or more employees to electronically transmit to the collection services center the amounts withheld under an income withholding order.

        At the time of this writing, there may be additional specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in Iowa. If you are located in Iowa or are working with contractors located in Iowa, you will want to check the state website and your attorney to get more information.

        Go back up to view the complete list of US states and territories.

        Kansas Independent Contractor / Freelancer Reporting Requirements

        At the time of this writing, there are no specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in Kansas. If you are located in Kansas or are working with contractors located in Kansas, you will want to check the state website and your attorney to see if anything has changed.

        Go back up to view the complete list of US states and territories.

        Kentucky Independent Contractor / Freelancer Reporting Requirements

        At the time of this writing, there are no specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in Kentucky. If you are located in Kentucky or are working with contractors located in Kentucky, you will want to check the state website and your attorney to see if anything has changed.

        Go back up to view the complete list of US states and territories.

        Louisiana Independent Contractor / Freelancer Reporting Requirements

        At the time of this writing, there are no specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in Louisiana. If you are located in Louisiana or are working with contractors located in Louisiana, you will want to check the state website and your attorney to see if anything has changed.

        Go back up to view the complete list of US states and territories.

        Maine Independent Contractor / Freelancer Reporting Requirements

        In Maine, independent contractors and freelancers can submit an Application for Predetermination of Independent Contractor Status to Establish A Rebuttable Presumption

        In addition, employers in Maine are required to report an independent contractor as a new hire when payment for the services is anticipated to be $2,500 or more. The report must be completed within seven (7) days of hire on federal form W-4 or equivalent and sent to the Maine New Hire Reporting Agency.

        At the time of this writing, there may be additional specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in Maine. If you are located in Maine or are working with contractors located in Maine, you will want to check the state website and your attorney to get more information.

        Go back up to view the complete list of US states and territories.

        Maryland Independent Contractor / Freelancer Reporting Requirements

        At the time of this writing, there are no specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in Maryland. If you are located in Maryland or are working with contractors located in Maryland, you will want to check the state website and your attorney to see if anything has changed.

        Go back up to view the complete list of US states and territories.

        Massachusetts Independent Contractor / Freelancer Reporting Requirements

        Massachusetts regulations require employers with 25 or more employees to report their new hires and independent contractors online. Businesses and government entities are required to report specific independent contractor information when:

        • The independent contractor is 18 years old or older; and
        • You pay the independent contractor $600 or more in a calendar year and you are required to file a Form 1099 for the services performed; and
        • The independent contractor is liable for his or her own taxes.

        Employers are required to submit new hire reports within 14 days after an employee or independent contractor is hired, rehired or returns to work. If an independent contractor is re-hired under a new contract, a report must be sent within 14 days of the independent contractor’s first day under the new contract.

        A penalty of $25 per employee per month may be assessed for each failure to report a new hire. Also, a penalty of $500 may be assessed for the failure to report new hire information if the failure is the result of conspiracy between the business or government entity and the employee.

        If you are located in Massachusetts or are working with contractors located in Massachusetts, you will want to check the state website and your attorney to see if anything has changed.

        Go back up to view the complete list of US states and territories.

        Michigan Independent Contractor / Freelancer Reporting Requirements

        While government agencies must report independent contractors they hire, all other employees may provide the same information on their independent contractors and freelancers if they choose. 

        If you are located in Michigan or are working with contractors located in Michigan, you will want to check the state website and your attorney to see if anything has changed.

        Go back up to view the complete list of US states and territories.

        Minnesota Independent Contractor / Freelancer Reporting Requirements

        Per MN Statute 256.998, state and local government agencies (but not federal) must report independent contractors they hire. All other employees may provide the same information on their independent contractors and freelancers to whom they make payments that require the filing of a 1099-MISC report if they choose. 

        If you are located in Minnesota or are working with contractors located in Minnesota, you will want to check the state website and your attorney to see if anything has changed.

        Go back up to view the complete list of US states and territories.

        Mississippi Independent Contractor / Freelancer Reporting Requirements

        At the time of this writing, there are no specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in Mississippi. If you are located in Mississippi or are working with contractors located in Mississippi, you will want to check the state website and your attorney to see if anything has changed.

        Go back up to view the complete list of US states and territories.

        Missouri Independent Contractor / Freelancer Reporting Requirements

        At the time of this writing, there are no specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in Missouri. If you are located in Missouri or are working with contractors located in Missouri, you will want to check the state website and your attorney to see if anything has changed.

        Go back up to view the complete list of US states and territories.

        Montana Independent Contractor / Freelancer Reporting Requirements

        At the time of this writing, there are no specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in Montana. If you are located in Montana or are working with contractors located in Montana, you will want to check the state website and your attorney to see if anything has changed.

        Go back up to view the complete list of US states and territories.

        Nebraska Independent Contractor / Freelancer Reporting Requirements

        In Nebraska, independent contractors fall under the same new hire requirements that apply for normal employees and temporary employees. According to Nebraska Statute §48-2302, “employee means an independent contractor or a person who is compensated by or receives income from an employer or other payor, regardless of how such income is denominated.” Employers must file within 20 days.

        Paying Freelancers and Vendors?

        Our customers report that using Liquid allows them to put off hiring an Operations Manager and/or Bookkeeper.

          If you are located in Nebraska or are working with contractors located in Nebraska, you will want to check the state website and your attorney to see if anything has changed.

          Go back up to view the complete list of US states and territories.

          Nevada Independent Contractor / Freelancer Reporting Requirements

          At the time of this writing, there are no specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in Nevada. If you are located in Nevada or are working with contractors located in Nevada, you will want to check the state website and your attorney to see if anything has changed.

          Go back up to view the complete list of US states and territories.

          New Hampshire Independent Contractor / Freelancer Reporting Requirements

          In New Hampshire, you must report independent contractors and freelancers under the new hire law.  An independent contractor is reportable under the New Hire Program if:

          • The freelancer or independent contractor operates his or her business as a sole proprietorship; and
          • You expect to reimburse the freelancer or independent contractor more than $2,500 for services for one or more contracts in a calendar year’s time (regardless of the amount of time the contract covers).

          “Contract for services” include oral, written, formal and informal agreements. 

          In addition, if the contracts did not anticipate exceeding $2,500 in one calendar year but you make a payment that then exceeds the $2,500 threshold, then you must file a report. Some employers chose to report all independent contractors as “new hires” rather than monitor these contracts for the amounts anticipated or paid.

          This reporting must be done within 20 days and can be completed online or by mailing or faxing a copy of each employees’ W-4 form. 

          If you are located in New Hampshire or are working with contractors located in New Hampshire, you will want to check the state website and your attorney to see if anything has changed.

          Go back up to view the complete list of US states and territories.

          New Jersey Independent Contractor / Freelancer Reporting Requirements

          New Jersey state law requires that an independent contractor transacting business in New Jersey be reported as a new hire by all employers, both public and private. N.J.S.A. 2A:17-56.61 requires all employers to submit their new hire reports within 20 days after the employee is hired or re-hired or returns to work. Failure to report a new employee could result in a fine up to $25 per violation. This reporting can be completed online

          Download Liquid’s Employee (W2) versus Independent Contractor (1099) Compliance Checklist as a handy reference when evaluating your relationships with freelancers.

          If you are located in New Jersey or are working with contractors located in New Jersey, you will want to check the state website and your attorney to see if anything has changed.

          Go back up to view the complete list of US states and territories.

          New Mexico Independent Contractor / Freelancer Reporting Requirements

          At the time of this writing, there are no specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in New Mexico. If you are located in New Mexico or are working with contractors located in New Mexico, you will want to check the state website and your attorney to see if anything has changed.

          Go back up to view the complete list of US states and territories.

          New York Independent Contractor / Freelancer Reporting Requirements

          At the time of this writing, there are no specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in New York. If you are located in New York or are working with contractors located in New York, you will want to check the state website and your attorney to see if anything has changed.

          Go back up to view the complete list of US states and territories.

          North Carolina Independent Contractor / Freelancer Reporting Requirements

          At the time of this writing, there are no specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in North Carolina. If you are located in North Carolina or are working with contractors located in North Carolina, you will want to check the state website and your attorney to see if anything has changed.

          Go back up to view the complete list of US states and territories.

          North Dakota Independent Contractor / Freelancer Reporting Requirements

          At the time of this writing, there are no specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in North Dakota. If you are located in North Dakota or are working with contractors located in North Dakota, you will want to check the state website and your attorney to see if anything has changed.

          Go back up to view the complete list of US states and territories.

          Northern Mariana Islands Independent Contractor / Freelancer Reporting Requirements

          At the time of this writing, there are no specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in the Northern Mariana Islands. If you are located in the Northern Mariana Islands or are working with contractors located in the Northern Mariana Islands, you will want to check the state website and your attorney to see if anything has changed.

          Go back up to view the complete list of US states and territories.

          Ohio Independent Contractor Contractor / Freelancer Requirements

          All employers are required to report every employee and independent contractor working in Ohio to the Ohio New Hire Reporting Center within 20 days of the date of hire. Ohio Revised Code (ORC) Section 3121.89 defines a Contractor as an individual who provides services to an employer as an independent contractor for compensation that is reported as income other than wages and who is an individual, the sole shareholder of a corporation, or the sole member of a limited liability company.

          “Contractor” does not include any of the following:

          • An individual performing intelligence or counterintelligence functions for a state agency if the head of the agency has determined that reporting pursuant to this section could endanger the safety of the individual or compromise an ongoing investigation or intelligence mission
          • A professionally licensed person who is providing services to the employer under that license
          • An individual who will receive for the services provided under the contract compensation of less than two thousand five hundred dollars ($2,500) per year or a greater amount that the director of job and family services establishes by rule adopted under section 3121.896 of the Revised Code.

          Managing Freelancers and Vendors?

          Our customers report saving 20 hours per month (on average) when they use Liquid’s complete contractors and vendor management system.

            If you are located in Ohio or are working with contractors located in Ohio, you will want to check the state website and your attorney to see if anything has changed.

            Go back up to view the complete list of US states and territories.

            Oklahoma Independent Contractor / Freelancer Reporting Requirements

            At the time of this writing, there are no specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in Oklahoma. If you are located in Oklahoma or are working with contractors located in Oklahoma, you will want to check the state website and your attorney to see if anything has changed.

            Go back up to view the complete list of US states and territories.

            Oregon Independent Contractor / Freelancer Reporting Requirements

            At the time of this writing, there are no specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in Oregon. If you are located in Oregon or are working with contractors located in Oregon, you will want to check the state website and your attorney to see if anything has changed.

            Go back up to view the complete list of US states and territories.

            Pennsylvania Independent Contractor / Freelancer Reporting Requirements

            At the time of this writing, there are no specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in Pennsylvania. If you are located in Pennsylvania or are working with contractors located in Pennsylvania, you will want to check the state website and your attorney to see if anything has changed.

            Go back up to view the complete list of US states and territories.

            Puerto Rico Independent Contractor / Freelancer Reporting Requirements

            At the time of this writing, there are no specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in Puerto Rico. If you are located in Puerto Rico or are working with contractors located in Puerto Rico, you will want to check the state website and your attorney to see if anything has changed.

            Go back up to view the complete list of US states and territories.

            Rhode Island Independent Contractor / Freelancer Reporting Requirements

            At the time of this writing, there are no specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in Rhode Island. If you are located in Rhode Island or are working with contractors located in Rhode Island, you will want to check the state website and your attorney to see if anything has changed.

            Go back up to view the complete list of US states and territories.

            South Carolina Independent Contractor / Freelancer Reporting Requirements

            At the time of this writing, there is an optional requirement for reporting engagements with or payments to independent contractors, freelancers, and vendors in South Carolina. If you are located in South Carolina or are working with contractors located in South Carolina, you will want to check the state website and your attorney to see if anything has changed.

            Go back up to view the complete list of US states and territories.

            South Dakota Independent Contractor / Freelancer Reporting Requirements

            At the time of this writing, there are no specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in South Dakota. If you are located in South Dakota or are working with contractors located in South Dakota, you will want to check the state website and your attorney to see if anything has changed.

            Go back up to view the complete list of US states and territories.

            Tennessee Independent Contractor / Freelancer Reporting Requirements

            At the time of this writing, there are no specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in Tennessee. If you are located in Tennessee or are working with contractors located in Tennessee, you will want to check the state website and your attorney to see if anything has changed.

            Go back up to view the complete list of US states and territories.

            Texas Independent Contractor / Freelancer Reporting Requirements

            All employers are required to report every employee and independent contractor working in Texas. This became mandated in 2017 when the definition of “employee” was broadened to include “an independent contractor as defined by the Internal Revenue Service and whose income is required to be reported on Form 1099-MISC.” 

            The Texas Administrative Code provides a penalty of $25 for each occurrence in which an employer fails to report hiring an employee or an independent contractor, or a penalty of $500 for conspiring with an employee or an independent contractor to fail to file a report or submit a false or incomplete report.

            Paying Freelancers and Vendors?

            Our customers report that using Liquid allows them to put off hiring an Operations Manager and/or Bookkeeper.

              If you are located in Texas or are working with contractors located in Texas, you will want to check the state website and your attorney to see if anything has changed.

              Go back up to view the complete list of US states and territories.

              Utah Independent Contractor / Freelancer Reporting Requirements

              At the time of this writing, there may be specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in Utah. If you are located in Utah or are working with contractors located in Utah, you will want to check the state website and your attorney to get more information.

              Go back up to view the complete list of US states and territories.

              Vermont Independent Contractor / Freelancer Reporting Requirements

              At the time of this writing, there are no specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in Vermont. If you are located in Vermont or are working with contractors located in Vermont, you will want to check the state website and your attorney to see if anything has changed.

              Go back up to view the complete list of US states and territories.

              US Virgin Islands Independent Contractor / Freelancer Reporting Requirements

              At the time of this writing, there are no specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in the US Virgin Islands. If you are located in the US Virgin Islands or are working with contractors located in the US Virgin Islands, you will want to check the state website and your attorney to see if anything has changed.

              Go back up to view the complete list of US states and territories.

              Virginia Independent Contractor / Freelancer Reporting Requirements

              As of 2020, Virginia requires that Independent Contractors be reported as new hires along with employees. Virginia Statute 63.2-1946 requires all employers to report newly hired and re-hired employees and independent contractors to a state directory within 20 days of their hire date. In Virginia Statute § 60.2-212, a Contractor is defined as an individual who 

              • provides any service performed for remuneration or under any contract of hire, written or oral, express or implied; and 
              • is not an employee pursuant to the definition of “employment”.

              In addition, “Contractor” does not include an individual performing intelligence or counterintelligence functions for a state agency if the head of the agency has determined that reporting pursuant to this section could endanger the safety of the individual or compromise an ongoing investigation or intelligence mission.

              “New independent contractor” means an independent contractor who (i) has not previously had a contract with the employer or (ii) had previously entered into a contract and has received a payment after receiving no payments for at least 60 consecutive days. 

              Reporting can be complete online, electronically, by mail, or by fax.

              If you are located in Virginia or are working with contractors located in Virginia, you will want to check the state website and your attorney to see if anything has changed.

              Go back up to view the complete list of US states and territories.

              Washington Independent Contractor / Freelancer Reporting Requirements

              At the time of this writing, there are no specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in Washington. If you are located in Washington or are working with contractors located in Washington, you will want to check the state website and your attorney to see if anything has changed.

              Go back up to view the complete list of US states and territories.

              West Virginia Independent Contractor / Freelancer Reporting Requirements

              In West Virginia, there are reporting requirements for independent contractors and freelancers. Per West Virginia Code §48-18-125, this is required when contracting for services in West Virginia with an independent contractor when payment for the services is $2,500 or more. Payment for such services shall be reported “within fourteen days of the earlier of first making payments that in the aggregate equal or exceed $2,500 in any year or contracts with an independent contractor providing for payments that in the aggregate equal or exceed $2,500 in any year.”

              Employers required to report may assess each employee or independent contractor reported $1.00 for the administrative costs of reporting.

              In addition, “Contractor” does not include an individual performing intelligence or counterintelligence functions for a state agency if the head of the agency has determined that reporting pursuant to this section could endanger the safety of the individual or compromise an ongoing investigation or intelligence mission.

              Paying Freelancers and Vendors?

              Our customers report that using Liquid allows them to put off hiring an Operations Manager and/or Bookkeeper.

                A penalty of $25 per employee may be assessed for each failure to report a new hire. Also, a penalty of up to $500 may be assessed for the failure to report new hire information if the failure is the result of conspiracy between the business or government entity and the employee.

                If you are located in West Virginia or are working with contractors located in West Virginia, you will want to check the state website and your attorney to see if anything has changed.

                Go back up to view the complete list of US states and territories.

                Wisconsin Independent Contractor / Freelancer Reporting Requirements

                At the time of this writing, there are no specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in Wisconsin. If you are located in Wisconsin or are working with contractors located in Wisconsin, you will want to check the state website and your attorney to see if anything has changed.

                Go back up to view the complete list of US states and territories.

                Wyoming Independent Contractor / Freelancer Reporting Requirements

                At the time of this writing, there are no specific state requirements for reporting engagements with or payments to independent contractors, freelancers, and vendors in Wyoming. If you are located in Wyoming or are working with contractors located in Wyoming, you will want to check the state website and your attorney to see if anything has changed.

                Go back up to view the complete list of US states and territories.

                Independent Contractor Reporting

                It’s important to stay up-to-date on the latest reporting and compliance requirements for the state in which your company is based and any states in which independent contractors that you engage are based. Your attorney can advise you on requirements and any necessary steps for your company, to help you mitigate the risk and consequences of freelancer misclassification and compliance requirements.

                Liquid helps you with independent contractor reporting requirements by collecting essential data about your independent contractors during onboarding – like Form W-9.

                Ready to simplify your company’s contractor compliance management with Liquid? Try Liquid today

                Category: Compliance Ask Liquid Finance and Accounting Freelancer Management Operations

                Updated: March 18, 2021

                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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