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

Answer

In Hawaii, employers may hire independent contractors to perform services for their business. However, simply labeling a worker as an independent contractor does not necessarily make them one. According to the Hawaii Employment Security Law, service performed by an independent contractor is not considered employment and is not covered under the unemployment insurance law ^[3].

To determine whether a worker is an independent contractor or an employee, the employer must consider several factors, including the nature of the service involved and the extent to which the employer controls the worker’s work ^[1]. If the employer has the right to control the worker’s work, the worker is likely an employee, and the employer must pay employment taxes on their wages ^[4].

Therefore, if an employer hires workers as independent contractors to save money on taxes, they must ensure that the workers meet the requirements of an independent contractor and are not misclassified employees. Misclassifying employees as independent contractors can result in penalties and fines ^[4].

In summary, employers in Hawaii may hire independent contractors to perform services for their business, but they must ensure that the workers meet the requirements of an independent contractor and are not misclassified employees.

Source(s):

• [1] Employee or Independent Contractor
• [3] Unemployment Insurance | Handbook for Employers
• [4] Independent Contractor Defined | Internal Revenue Service

Jurisdiction

Hawaii

• Privacy