Many businesses spend a great deal of time and effort formulating ways to increase profits by expanding markets and increasing sales. While producing more revenue is a time proven way to increase profits, it is the actual bottom line of a company’s profits and losses that ultimately determine the success of the business. There are certain types of businesses that are limited in how much they can expand in their marketplace or the level to which they can increase sales volume, and for these types of companies, finding ways to streamline operations and reduce expenses is almost as important as increasing productivity and sales volume.
Minimizing expenses for any company is an ongoing process that requires a constant effort because the natural inclination of nearly any business is to have expenses gradually increase. Along with increased expenses comes the inevitable decrease in efficiency and productivity if employees and the general operation of the business are not closely monitored on a consistent basis. One of the ways that company managers combat decreasing workforce efficiency and escalating company expenses is to make use of independent contractors to reduce payroll expenses and increase productivity.
Not every company can make use of an independent contractor to perform specific tasks. Classification of independent contractors can be a somewhat gray area for many companies and it is important that a company not misclassify a position as that of an independent contractor when it should be classified as an employee. This can have serious repercussions with the IRS. When in doubt, a company should consult with an attorney familiar with labor laws to ensure that what should be classified as an employee is not classified as an independent contractor.