WHO IS AN INDEPENDENT CONTRACTOR?
Individuals who are in an independent trade, business, or profession in which they offer their services to the general public are generally independent contractors. The general rule is that an individual is an independent contractor if the payer has the right to control or direct - only the result of the work - and not what will be done and how it will be done.
The earnings of a person who is working as an independent contractor are subject to Self-Employment Tax.
Paying someone for the first time
Individuals must provide SPU with a completed W-9 for our records. (Justin - link to W-9 form for download).
If we do not have a W-9 on file, and they are an individual who would provide a social security number (SSN) on a W-9, Accounts Payable will request the W-9 directly from the vendor. This is to ensure that SPU employees do not receive unencrypted SSNs in their SPU email accounts.
Independent Contractors
Independent contractors are vendors who perform services for the University but are not employees. Examples of individuals who might meet the criteria for IC Independent Contractor status are:
Guest performers or artists who otherwise are not affiliated with the University.
Guest Speakers or lecturers brought to the University for a very short duration because of their expertise.
Individuals providing professional services who routinely hold themselves out to the public as providing such services for a fee. Examples include accountants, attorneys and medical providers.
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It is important that the University makes the correct determination as to whether the person is an independent contractor, or should be paid as an employee. Employers who misclassify workers as independent contractors can end up with substantial tax liabilities and penalties. The general rule is that an individual is an independent contractor if you, the person for whom the services are performed, have the right to control or direct only the result of the work and not the means and methods of accomplishing the result.
Paying Independent Contractors
The compensation paid to independent contractors is taxable. Accounts Payable does not withhold taxes from the payments. The income is reported to the recipient and to the IRS at the end of each tax year on Form 1099. For this reason, it is very important that the payments to the independent contractors are made by Accounts Payable. Please do not pay anyone who has performed a service with P-Card, cash, personal check, or with a personal credit card. By doing so you would place the University in violation of the Internal Revenue Code and our ability to reimburse you is at a risk.