Independent Contractors
Question: I heard that if a company has a Contractor doing work for them that they “can not”/ “should not” have them setup on the company’s Direct Deposit. Is this true?
From: Robert
INDUSTRY: UNKNOWN
RESPONSE
Robert,
Many businesses pay their vendors through direct deposit into a bank account, so this is not necessarily something that cannot or should not be done. We have a few clients that pay us through a direct deposit into or after they are invoiced. It is a good system for us as we know the deposit will be made on the 15th of every month.
However, if the contractor is being paid out of a payroll account, this is problematic.
If a client is using an independent contractor, there should be some sort of contractor agreement and the contractor should invoice the company for his/her work. Payment to the contractor is usually made through a general fund and not through a payroll account.
So, the answer to your question is, “it depends” on how the direct deposit is made.
I hope this helps and thanks for Asking Bob.
Response from Robert:
Thanks Bob. That answers my question exactly.