ObamaCare Survival Fixes for Small Business Using The Independent Contractor


You are a small business owner and you just read an overview of the requirements and tax ramifications of the Patient Protection and Affordable Care Act (PPACA).

You are in shocked disbelief and totally demoralized.

But – – – what if you were able to make it all go away and get back to running your business?

READ ON – – – -

For the Small Business Owner one possible solution to the massive problems, governmental regulations, and cost imposed by the Affordable Care Act would be to convert employees from employee status to that of Independent Contractor.

This strategy, however, would only be successful in limited circumstances.

The Independent Contractor Solution

In recent years more and more businesses are using the services of independent contractors.

The problem, however, has always been with the potential danger that the IRS could reclassify your independent contractor working relationship as an employee relationship.

This reclassification by the IRS can become very costly.

IMPORTANT: Exercise Caution With Implementation

If you are interested in pursuing this option it is imperative that you study and become very familiar with the qualification standards set by the federal government, the IRS, and even your own state government.

Any mistakes in this area can be costly to your business in the future.

Also, because of the financial mess that the government is in (both federal and state), expect them to be taking a close look at all independent contractor relationships.

The History …

If you were in business in the early 1990s you are probably familiar with the “20 rule checklist” used by the IRS to classify an independent contractor.

As history shows, if you give a federal bureaucracy the tools and power to use them – they will abuse them.

So by the mid 1990s so many small businesses were closed down by the IRS  that congress had to pass an amendment to the tax code called “The Small Business Job Protection Act of 1996″. 

This act removed the very strict set of guidelines the IRS used to classify independent contractors.

In 1996 the IRS released a manual for its auditors to use for determination of independent contractors and the manual is still in use.     

see IRS publication independent contractor (self employed) or employee?

The general IRS 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.   

see irs.gov – independent contractor defined

Also, because the IRS is really trying to tighten the requirements for who is an Independent Contractor, it is very important to keep up on the latest updates. Just go to irs.gov and put independent contractor in the search bar at the top.

Here is something to check out:

see tax topics – 762 independent contractor

If you wish to pursue this course, make sure to do the research and prepare a solid foundation. The following small business information resource should provide a start:

Get Started With The ObamaCare Survival Independent Contractor Solution

see Diversified Business Online

Good Luck and Stay Tuned for Further Ideas