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Can I hire employees as independent contractors to save money on taxes in Georgia? What are the requirements?

Based on the context documents, it is important to note that Georgia has specific requirements for determining whether a worker is an independent contractor or an employee. To prove independent contractor status, an employing unit must prove an individual who receives wages meets either the two-pronged test or the alternative SS-8 requirement for exemption from the definition of ’employment’ as provided in OCGA Section 34-8-35, Paragraph (f) [1.1]. In applying the second prong of the test specified in OCGA Section 34-8-35, paragraph (f), it shall not be sufficient that the individual simply holds a professional or occupational license. It must be proved the individual performs the licensed services in question for clients, patients or customers other than the employing unit. Such services must be in the same occupation or line or work as being performed for the employing unit [1.1].

Therefore, it is important to carefully evaluate the nature of the work relationship and the specific requirements set forth by Georgia law before classifying a worker as an independent contractor. Failure to properly classify a worker can result in significant legal and financial consequences.

In addition, nonresident contractors desiring to engage in the business of contracting in Georgia must register with the commissioner for each contract when the total contract price or compensation to be received amounts to more than $10,000.00 and shall report to the commissioner as provided by rule with respect to the tax liability of the contractor pursuant to the business including, but not limited to, liability under Chapter 8 of Title 34. The commissioner shall charge a fee for the registration in the amount of $10.00 for each contract [2.1].

Furthermore, public employers, their contractors, and subcontractors are required to verify new employee work eligibility through a federal work authorization program [3.1]. Georgia purchasers or dealers must provide a Certificate of Exemption, Georgia Purchaser or Dealer Form ST-5 for purchases of exempt tangible personal property [5.1].

Finally, an individual person seeking issuance of a Georgia license in his or her own name for purposes of engaging in the profession of general contracting in his or her own name or doing business as an individual in a trade name as a sole proprietorship shall file an application on a form provided by the general contractor division, accompanied by an application fee as provided by the board. Additionally, such applicants must submit to and successfully pass an examination approved by the general contractor division, except where an applicant is otherwise qualified for licensure and has satisfied the general contractor division requirements and regulations [6.1].

In summary, while it may be possible to hire employees as independent contractors to save money on taxes in Georgia, it is important to ensure that the worker meets the specific requirements set forth by Georgia law for independent contractor status. Additionally, nonresident contractors must register with the commissioner for each contract when the total contract price or compensation to be received amounts to more than $10,000.00 and public employers, their contractors, and subcontractors are required to verify new employee work eligibility through a federal work authorization program. Georgia purchasers or dealers must provide a Certificate of Exemption, Georgia Purchaser or Dealer Form ST-5 for purchases of exempt tangible personal property. Finally, an individual person seeking issuance of a Georgia license in his or her own name for purposes of engaging in the profession of general contracting in his or her own name or doing business as an individual in a trade name as a sole proprietorship must file an application and pass an examination approved by the general contractor division [1.1][2.1][3.1][5.1][6.1].

Source(s):
Jurisdiction

Georgia, Georgia