Frequently Asked Questions
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What are the 2006 IRS limits for mileage reimbursement? |
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What is the difference between an employee and an independent contractor? |
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1. What are the 2006 IRS limits for mileage reimbursement?
For 2006, the Internal Revenue Service raised mileage reimbursement rates to $0.445 per mile.
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2. What is the difference between an employee and an independent contractor?
Whether a person is an independent contractor or an employee generally depends on the amount of control exercised by the employer over the work being done. Dictating how a job is done or the actions of the worker may establish an employer-employee relationship.
Independent contractor
- Operates under a business name
- Has his or her own employees
- Maintains a separate business checking account
- Advertises his or her business' services
- Invoices your for work done
- Has more than one client
- Has their own tools and sets their own hours
- Keeps their own business records
Employee
- Performs duties dictated or controlled by others
- Is given training for work to be done
- Works for only one employer
For most small businesses, independent contractors should not be considered as substitutes for employees. Government agencies generally find that people in the work force are legally employed for tax purposes and the cost of being wrong, remitting unpaid payroll taxes, interest and penalties are very high.
(Information courtesy of http://www.sba.gov/)
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