Employee vs. Independent Contractor – Ten Tips for Business Owners

Many times when we are looking for help around the farm we run into this nagging problem--is the worker an employee or an independent contractor? Here is a great summary just released by the IRS. If you know this info up front you can structure your working relationship in such a way that you will stay in compliance with the requirements of the IRS.

Released August 21, 2009
If you are a small business owner, whether you hire people as independent contractors or as employees will impact how much taxes you pay and the amount of taxes you withhold from their paychecks. Additionally, it will affect how much additional cost your business must bear, what documents and information they must provide to you, and what tax documents you must give to them. Here are the top ten things every business owner should know about hiring people as independent contractors versus hiring them as employees.

1. Three characteristics are used by the IRS to determine the relationship between businesses and workers: Behavioral Control, Financial Control, and the Type of Relationship.
2. Behavioral Control covers facts that show whether the business has a right to direct or control how the work is done through instructions, training or other means.
3. Financial Control covers facts that show whether the business has a right to direct or control the financial and business aspects of the worker's job.
4. The Type of Relationship factor relates to how the workers and the business owner perceive their relationship.
5. If you have the right to control or direct not only what is to be done, but also how it is to be done, then your workers are most likely employees.
6. If you can direct or control only the result of the work done -- and not the means and methods of accomplishing the result -- then your workers are probably independent contractors.
7. Employers who misclassify workers as independent contractors can end up with substantial tax bills. Additionally, they can face penalties for failing to pay employment taxes and for failing to file required tax forms.
8. Workers can avoid higher tax bills and lost benefits if they know their proper status.
9. Both employers and workers can ask the IRS to make a determination on whether a specific individual is an independent contractor or an employee by filing a Form SS-8 – Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding – with the IRS.
10. You can learn more about the critical determination of a worker’s status as an Independent Contractor or Employee at IRS.gov by selecting the Small Business link. Additional resources include IRS Publication 15-A, Employer's Supplemental Tax Guide, Publication 1779, Independent Contractor or Employee, and Publication 1976, Do You Qualify for Relief under Section 530? These publications and Form SS-8 are available on the IRS Web site or by calling the IRS at 800-829-3676 (800-TAX-FORM).

Links:
Contractor vs. Employee
Publication 1779
Publication 15-A

Alpaca Farm Days 2009

The last weekend in September you will find alpaca farms all over the United States and Canada opening their gates to welcome the public. This annual event is a great opportunity for us to share information about the breed and for you to get a better look at these wonderful animals. Alpacas at Tucker Creek will be open from 10:00 am to 4:00 pm on both Saturday, September 26th and Sunday, September 27th.

During the weekend you will have the opportunity to see the daily activities involved in working with alpacas including cleaning the barn and pastures, feeding, toe nail trimming, shearing and breeding--depending on your time of arrival. There will also be farm tours and fiber spinning demonstrations. We are fortunate to have local fiber artist, Peggy Boisvert, joining us for part of the weekend. Alpaca yarn and finished products are available in our farm store--a great way to start your Christmas shopping.

Please join us as we love sharing these wonderful animals with visitors. Refreshments will be served and there will be drawings throughout the day. The only cost for admission is a nonperishable food item for the Clatsop Community Action Regional Food Bank or the Clatsop County Animal Control Shelter. Look forward to seeing you there. Please follow this link for directions.

Business Start Up Package under $100,000--Cash, Credit Card or Terms

We have just updated this package to include another junior herdsire and to expand the terms available for purchase to include Cash, Credit Card and terms to be determined by your needs. The entire $98,750 is eligible for Section 179 treatment when you file your 2009 tax return. The cria at side are too young to be considered "placed in service" by 12/31/2009 so they could be valued at zero for 2009 and receive full capital gain treatment upon their sale. 7 of them would qualify for the 50% bonus depreciation deduction as they would be considered "new" at the time of purchase. Review the summary below and consider the tax benefits it could provide as well as the giant step it would represent in your overall herd development.

5 females bred for 2009, 2 come with their 2009 cria at side, 6 females ready for breeding for 2010. Contact us soon and you can select their breedings from the males available on our farm. All (but the female cria) are or will be bred to Studmaster™ herdsires. 9 of them are Studmaster™ progeny. The purchase of each of the males in the package represents a 1/2 interest. You have full possession--we retain 1/2 interest so we can maintain our breeding rights.The purchase entitles you to the full benefits of the Ideal Alpaca Community--the only operational Alpaca EPD program in the country. Your purchase also includes a fully operational website and inclusion in our mentoring program. This price does not include transportation charges. Package includes agistment until all adult females are bred and ready for transport to your farm. And, don't forget, 90 days qualifies as a cash sale.

Price: $98,750

Alpacas included in package: (15 alpacas) (click alpaca name to view details)

Bella - Huacaya, Female, White
Strong, beautiful and second generation Studmaster™. Buy her today and even though she is a 2009 cria she comes with a breeding to any of the herdsires available on our farm when she is ready (not including transport charges). She is also available in a package with her mother, Tucker Creek's Cheyenne....Read More

Cheyenne - Huacaya, Female, Pattern
Beautiful female from elite lines. Cheyenne's fiber has a soft silky handle with 4 to 5 crimps per inch. Her fiber continued to be in the low 20's for the 2008 shearing season. She stands proud and tall and has proven to be an incredible first time mom.Cheyenne comes with a breeding for 2010 and is also...Read More

Clearwater - Huacaya, Female, White
Clearwater is a perfectly white female out of a gorgeous dark brown dam. Her grandsire is El Toro and her sire is Hemingway's Bogart. She is an incredible second generation Studmaster™ female capable of bringing color, density, crimp and great conformation to your herd.An early August breeding to Glacial...Read More

Destiny's Child - Huacaya, Bred Female, Light Brown
Strong, energetic female with half Accoyo pedigree. Her fiber is dense, crimpy and fine. Her blanket is solid . . . the only white is on her head and chin. Her half brother was 2007 Fawn Color Reserve Champion at the California Classic. She can bring the same quality to your herd.She is currently bred ...Read More

Elana - Huacaya, Female, Dark Brown
Elana is a beautiful chocolate brown female. Fantastic coverage with a gorgeous head and a dense fleece. She is a wonderful proven mom having delivered four incredible females to date . . . one dark chocolate and two perfectly white and the fourth a lovely toffee color. Elana has given us four gorgeous fe...Read More

Jewell - Huacaya, Female, Medium Fawn
With the gentle spirit of Eloisa and Sun Tzu and the quality genetics from each of her parents Jewell will be a wonderful addition to your herd. As a second generation Studmaster™ progeny you will find in her the density, crimp and fineness we all seek....Read More

Katrina - Huacaya, Bred Female, Medium Silver Grey
What a beautiful grey female with a sweet disposition. She is an excellent mother. Her fiber is consistent throughout and she has a good handle. She is currently bred to EC Sun Tzu for a estimated July delivery. ...Read More

Loki - Huacaya, Female, Medium Fawn
Loki is a beautiful fawn greatgranddaughter of Peruvian Hemingway. She has a bit of color in her background including grey. She has a nice soft handle with ample staple length. She is scheduled to be bred in late June to Sun Tzu. That is the same breeding that last year produced Tucker Creek's Heath. H...Read More

Milagro - Huacaya, Bred Female, Medium Brown
Another gorgeous female out of Octavia . . . with Glacial Storm as dad. ...Read More

October Fest - Huacaya, Bred Female, Medium Rose Grey
October Fest is stunning with soft handling fleece. Interesting mahogany/coffee roan gray with beautiful profile. October Fest is currently being sold along with 1/2 interest in her 2008 male cria, Tucker Creek's Rocky Road. This includes full possession of the male cria. At his current age it is too soon...Read More

Tiffany - Huacaya, Female, Dark Silver Grey
Tiffany is a flashy dark grey female with light grey polka-dots. Her fleece is a rich color with high frequency crimp, super nice handle and the brightness you'd expect coming from two suri parents. Check out her histogram . . . pretty good, especially for grey!Tiffany delivered a beautiful male cria out o...Read More

Victoria - Huacaya, Bred Female, Medium Brown
An incredible Hemingway granddaughter. Victoria is a beautiful girl from Award Winning Studmaster™, Hemingway's Tequila. She is a wonderful mother. Her 2007 cria, Tucker Creek's Revival, is currently available as a young herdsire. Each year we select the male cria we feel have the most potential and Revival made...Read More

Revival - Huacaya, Male, Medium Brown
Another excellent example of the success of the Studmaster program. Revival is a second generation Studmaster progeny. His dam is out of MSA Hemingway's Tequila and his sire is EC Sun Tzu. He already is exhibiting many of the personality traits of Sun Tzu along with the density and crimp you would expect from h...Read More

Revolution - Huacaya, Male, White
Revolution has all the characteristics you hope for in a male--square conformation; low micron count; good staple length and a great attitude. He is strong and has the ability to bring rose grey into your herd along with the Accoyo attributes of his sire, Pacific Crest Accoyo Paul Revere.The photo of his ...Read More

Rocky Road - Huacaya, Male, Medium Fawn
Another gorgeous Sun Tzu male--vigorous and curious.1/2 interest in Rocky Road is currently included in a package with his dam for the current list price of the dam. This includes full possession of the male cria. At his current age it is too soon to tell if he will have a future as a herdsire. This is a g...Read More

Fuego - Huacaya, Male, Dark Rose Grey
And last but not least, we have just added Tucker Creek Fuego. As with all the males, only 1/2 interest transfers--but he will be on your farm full time. He is a gorgeous dark rose grey with more grey showing up all the time.

Annual "Buy One Alpaca and Get the Second for 1/2 Price" Sale

Annual "Buy One Alpaca and Get the Second for 1/2 Price" Sale

The American Recovery and Reinvestment Act extended the 50% Bonus Depreciation & increased Section 179 deduction ($250,000 maximum) through 2009 making this year the best year to begin or expand your herd.

Pick out your favorite alpaca and match it up with another of an equal or lesser value.

Match up as many combos as you like.

Cash, credit cards and terms.

Additional 5% discount for cash transactions (90 days is the same as cash).

No interest if paid off within one year.

Free transportation within Continental US.

The American Recovery and Reinvestment Act of 2009

August is here; soon school will be back in session and before we know it the holidays will be upon us. This is just a reminder that during 2009 many new tax provisions were introduced. Follow this link to the IRS published summary of the provisions of the American Recovery and Reinvestment Act of 2009.

The ones which tend to have the greatest impact on us relate to net operating losses and depreciation related deductions. The new law allows any small business the opportunity to carry a net operating loss back for five years as opposed to the prior law of two years. Farming operations were already allowed a five year carryback--this is just a reminder to not forget this provision when you are considering your alternatives.

The tax planning opportunity here is that depending on your particicular situation any of the following could be to your benefit:

to take bonus depreciation in order to create a net operating loss which could be carried back;
to take a current year Section 179 and bonus depreciation deductions which could be carried forward to a year when you anticipate sufficient income;
any combination of the above which maximizes your tax benefits.

When you consider the limitations on this year's deductions you can easily see the impact they could have on your potential tax liability. The bonus depreciation is only available on NEW assets with a life of 20 years or less. It can be used this year to offset current year revenue; can be carried back five years to offset prior income or can be carried forward to future years. There is no limit on the amount of property which can qualify for this deduction. Section 179 is available on new or used property, is limited to $250,000; is reduced dollar for dollar if your eligible purchases exceed $800,000; can be used currently or can be carried forward--but is NOT eligible for carry back.

So start now to plan for your 2009 taxes. Consider the impact of buying new or used equipment or alpacas while the deductions are still available. Section 179 is scheduled to continue but next year it will be reduced to an amount probably in the range of $135,000 to $140,000 as it will be based on $125,000 adjusted for inflation from 2007. It is scheduled to be reduced to $25,000 in 2011. Currently there is no provision for the bonus depreciation deduction to continue beyond 2009. So you can see where these provisions alone make 2009 a great tax planning year.