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Streamline Summer Hiring: Navigate Seasonal Employees, Interns, and Payroll Compliance with Ease

Embarking on summer hiring? It's a fantastic opportunity to grow your business—until you encounter the complexities of the IRS regulations.

While the idea of onboarding interns or part-time help seems straightforward, summer hiring often leads to pitfalls for small business owners in assessing payroll, ensuring compliance, and accurate classification.

A solitary oversight—such as classifying a seasonal W-2 employee as a 1099 contractor—can lead to hefty penalties.

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Understanding Worker Classification: Employees vs. Contractors

If you've ever thought:

"We're compensating with a flat fee; it's simple."
"It's a brief 10-week stint."
"They're students; this isn't a 'real' job."

Consider this: Under IRS scrutiny, if you dictate when, where, and how work is performed, a W-2 is required.

The IRS dismisses distinctions of part-time, student, or favor-driven work. If it resembles employment, it is, and payroll taxes are necessary.

For comprehensive guidelines, refer to IRS insights on worker classification.

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Interns: Regular Employees in Disguise?

The ambiguity surrounding unpaid internships often misleads businesses. Unless tied to an educational curriculum with zero compensation expectations, the Department of Labor likely categorizes interns as employees.

This entails:

  • Mandatory adherence to minimum wage laws

  • Potential payroll tax obligations

  • Possible requirement for workers' comp insurance

Rule of thumb: If interns contribute materially to your business, formal payroll inclusion is necessary.

Leverage the Work Opportunity Tax Credit (WOTC)

The silver lining:

Hiring from specified groups like veterans or long-term unemployed can make you eligible for WOTC, offsetting federal income tax liabilities by up to $2,400 per eligible hire.

To capitalize:

  • Pre-employment application is essential

  • Submit paperwork to your state agency

  • Awareness remains low among businesses

Discover more about WOTC program here.

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Ensure Compliance Before First Payday

  • Accurate set-up of federal and state withholding

  • Activation of a reliable payroll system (manual checks miss filings)

  • Correct collection of Form I-9s and W-4s

  • Verification of local labor laws regarding benefits for part-timers

  • Determine overtime pay obligations, irrespective of season

Avoid Payroll Pitfalls

Focusing on business growth is pivotal, yet ignoring payroll protocols (even briefly) may result in:

  • Costly misclassification penalties

  • Neglected tax credits

  • Risk of state audits

  • Unanticipated employee claims

Seek Professional Guidance Before Hiring

We've helped numerous small enterprises facilitate summer payroll smoothly, avoiding bureaucratic complexities.

Planning to employ seasonal or internship positions soon? Consult us for guidance on compliance, risk mitigation, and uncovering potential tax credits.

Reach out before finalizing payroll—we can ensure a seamless start.

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