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

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

In Kansas, hiring employees as independent contractors to save money on taxes is not recommended [2.3]. The state requires contractors who are nonresidents of Kansas and desire to engage in, prosecute, follow or carry on the business of contracting to register with the Secretary of Revenue or the Secretary’s designee for each contract where the total contract price or compensation to be received amounts to more than $10,000 [1.1]. Additionally, Kansas has specific tax treatment for professional employer organizations and assigned workers, which may not apply to independent contractors [2.3].

Requirements for Hiring Independent Contractors in Kansas

If you still want to hire independent contractors in Kansas, you should be aware of the following requirements:

  • Independent contractors must be truly independent and not under the control of the employer [2.3].
  • The employer must not provide the independent contractor with employee benefits, such as health insurance or retirement plans [2.3].
  • The employer must not withhold taxes from the independent contractor’s pay [2.3].
  • The independent contractor must have a written contract that outlines the terms of the work to be performed [2.3].

It is important to note that misclassifying employees as independent contractors can result in penalties and fines from the state of Kansas [2.3].

Tax Credits for Hiring Employees

Kansas offers tax credits for businesses that invest in qualified business facilities and hire eligible individuals [2.1][2.2]. However, these tax credits are not applicable to independent contractors.

Conclusion

In summary, while it is possible to hire independent contractors in Kansas, it is not recommended due to the state’s requirements for nonresident contractors and specific tax treatment for professional employer organizations and assigned workers. If you do choose to hire independent contractors, make sure to follow the requirements outlined above to avoid penalties and fines. Additionally, tax credits for hiring employees are available for businesses that invest in qualified business facilities and hire eligible individuals, but these tax credits do not apply to independent contractors.

Source(s):
Jurisdiction

Kansas