There are a lot of things that drive your bookkeeper crazy.  Here's one.

A paycheck is for an employee and taxes are taken out of it.  Normally employees are paid at regular times. You know every other Friday or something.   

Vendors and independent contractors, on the other hand, send an invoice and get paid monthly.  

There's this crazy thing going on.  Business owners are paying vendors and independent contractors, at regular intervals; like a paycheck. No invoice or anything. 

Since our specialty is virtual full charge bookkeeping, we communicate with a lot of vendors on behalf of our clients and cut  checks.  We've received phone calls from these contractors on behalf of our clients from time to time; asking "when will my paycheck be ready?"  

It makes me crazy!  What I want to say is, " It's not a paycheck and where's my invoice?" but that would be rude. 

If you, as the business owner, allow this word to be used you're adding to the confusion.  Please stop and here's why. 

When you decide not to use that vendor or contractor anymore and the "paychecks" stop; they may head right down to the unemployment agency and claim unemployment.  They name you as the last employer and that's where the fun begins.  It's on you to prove that they were not an employee.  No invoices.  No proof.  You could be found liable for payroll taxes.  I've seen it happen and it's not pretty.  

To keep this from happening make sure you're doing these three things.

  1. Get a completed and signed W-9 from all individuals that gets a check.  No W-9. No Check. 
  2. Get an invoice from every vendor. Every time. 
  3. Don't use the words "payroll" or "paycheck" AND don't allow them to use it.  

Keep good records all year and 1099 time will be a piece of cake.  

Need more help and advice?  Check out the Flight Club for QuickBooks help, training and advice.  

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Dida

Dida is CEO and Founder of TheOfficeSquad.