Some independent contractor laws work against you, but there are some that actually work out in your favor. Knowing as many of the laws that impact your work from home is important when working from home. You'll avoid headaches and save money, even if you have to hire a small business attorney for help. Here are 4 laws that you need to know about, because they protect you:
1. Payment of Estimated Taxes
Bearing the responsibility of paying estimated taxes protects you, contrary to what you might think. Consider the alternative: multiple employers withholding money from your already small paycheck. With estimated tax payments, you are responsible for filing your tax returns and paying tax liabilities on your own. You may even be exempt from this requirement if you don't owe more than $1,000 for the tax year, after you take your deductions and credits. Imagine if every employer you worked for as an independent contractor withheld money for tax purposes. You would have far less money on a monthly basis to cover your living and work expenses. Estimated tax payments based on federal tax laws are one of the independent contractor laws that protect your financial interests.
2. Ensure You Get Paid
Signing agreements for independent contract work protects your status as a non-employee, but it also ensures that you'll get paid. It's true that anyone can breach a contract and not pay you if they don't want to, but contract laws give judges the authority to make employers pay you. For that to happen, you need to sign contracts that protect your interests, and that are well-written. Judges also have the authority to strike out vague language or void contracts full of legal errors. Whenever you don't understand contracts offered to you, especially for long-term work, have your attorney review it. Your attorney can also compare what's written to independent contractor laws, to make sure that the Internal Revenue Service (IRS) won't have any excuses to classify you as an employee for tax purposes.
3. Tax Laws for Business Deductions
If you don't own a business, tax laws allow you to take business deductions. You can't take advantage of business deductions if you work as a telecommuter. It's important to know which deductions you can take, so that you won't have to pay as much in taxes. You also won't make the mistake of taking deductions that you shouldn't, which can lead to audits by the IRS.
4. Right to Ownership of Work
When you create a product or generate an idea, you are the copyright owner. The only way that changes is if you agree to transfer it in a contract. You may have an opportunity to license your creative work when working as a contractor for additional pay. When you're an employee, everything you do belongs to your employer from the start.
You can use independent contractor laws to your benefit, but it takes some legal know-how, which your attorney can provide.
Daphne Mallory, Esq. is the co-owner of Mallory Writing Services and has written more than 100 articles helping home based business owners and entrepreneurs start and market their business. You can learn more about her here.