How do I classify an employee record as an "Independent Contactor"?
An Independent Contractor is a natural person, business, or corporation that provides goods or services to another entity under terms specified in a contract or within a verbal agreement; and is taxed the same as standard employment using the progressive tax tables.
An employee record can be classified as an Independent Contractor in the Tax Status field on the Tax Profile screen, on which three related tax statuses are available. These tax status result in the affected employee's Basic Pay component's tax code to be converted to 3616.
Navigate > Employee > Basic Information > Tax Profile > Tax
1. Independent Contractor: When this tax status is selected, the employee's UIF exemption reason will automatically default to “Independent Contractor” and no UIF contributions will be calculated.
Navigate > Employee > Basic Information > Basic Profile > Exemptions and Other
Navigate > Employee > Payroll Processing > Edit Payslip > Allowances
2. Independent Contractor (Directive): Independent contractors can be taxed on a fixed percentage (on a voluntary basis) based on a directive. When this tax status is selected, the employee's UIF and SDL exemption reasons will automatically default to “Independent Contractor” and “Learner/Excluded from SDL” respectively.
Navigate > Employee > Basic Information > Tax Profile > Tax
Navigate > Employee > Basic Information > Basic Profile > Exemptions and Other
Navigate > Employee > Payroll Processing > Edit Payslip
3. Independent Contractor (No Tax): When this tax status is selected, the employee's UIF and SDL exemption reasons will automatically default to “Independent Contractor” and “Learner/Excluded from SDL” respectively. No tax, UIF or SDL amounts will be calculated. As with the previous tax status, the employee's Basic Pay component's tax code will be converted to 3616
Navigate > Employee > Basic Information > Basic Profile > Exemptions and Other
Navigate > Employee > Payroll Processing > Edit Payslip
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