TN 8 (02-11)
RS 02101.095 Employment Status of Bookkeepers and Accountants
A. Bookkeeper and accountant defined
The accountant’s duties include organizing or establishing a system of records or investigating or reporting on the financial state of an organization. The accountant’s services are professional by nature and more complex than those of the bookkeeper. Certified public accountants (CPA) must meet additional State education and experience requirements for certification as a CPA. A CPA’s primary functions are financial audit services and public accounting. Corporations can employ a CPA.
A bookkeeper’s duties usually include balancing books, compiling reports, maintaining a complete and systematic set of records of the employer's business transactions, posting ledgers, and recording items in proper journals and on special forms.
Skilled bookkeepers may perform the duties of accountants and accountants often perform bookkeeper duties. There is no clear distinction between the two occupations.
B. Employee status of bookkeepers and accountants
Bookkeepers and accountants are employees when they:
are subject to direction and control of the employer, although they may not be closely supervised because they have the skill required to do the work;
are usually connected with a system of bookkeeping or accounting adopted by the employer;
do not make their services available to the public, or maintain their own offices;
enjoy the usual privileges extended by an employer to employees, including paid vacations, sick pay benefits, bonuses, etc.;
generally work fixed hours;
perform services at regular intervals for a single business for a fixed salary; and
work on the employer's premises with the necessary supplies and office help the employer furnished for them (except when the employer authorizes the employee to work at an alternate duty station, such as from home).
C. Status of bookkeepers and accountants as independent contractors
Bookkeepers and accountants are independent contractors when they:
are hired (potentially for a long period of time) to accomplish a specific result and are not subject to direction or control over the methods or means to accomplish it;
depend on their reputations and the amount of energy and resourcefulness they use to conduct their businesses;
do not have to perform their services on the premises of the purchaser of the services;
make their services available to the public;
pay their own business expenses, including the cost of equipment and materials, helper's wages, etc.;
render their services for a number of clients and receive remuneration on a fee basis; and
rent office space or maintain an office in their home.
D. Dual status of bookkeepers and accountants
Quite often, the bookkeeper and accountant render services under conditions that are a combination of employee and independent contractor. For example, an employee on one job and an independent contractor on another job. For a description of the usual conditions under which bookkeepers and accountants render services, see RS 02101.095B and RS 02101.095C in this section.
A self-employed accountant may occasionally accept a job under conditions that make him or her an employee. For example, an accountant might agree to prepare monthly statements and reports for a storeowner at the store for two hours every week. An employer-employee relationship exists if the storeowner:
Many bookkeepers and accountants who work 8-hour workdays as employees may also work for small firms on a contractual basis. They usually work at home, for a specified fee, and must complete the job by a certain time.
E. Principal factors that indicate an employer-employee relationship
The principal factors that indicate an employment relationship are:
either party may end the relationship without liability;
the worker cannot integrate his or her work into another business;
the worker does not personally incur business expenses;
the recurring nature of the services;
the alleged employer furnishes facilities and equipment (except when the employer authorizes the employee to work at an alternate duty station, such as from home); and
the worker must personally perform the work.
F. Consider the nature of the job to determine worker status
The nature of the worker’s job affects the degree of direction and control that is necessary to determine worker status. As highly trained professionals, accountants, in particular, may require very little direction and control. In analyzing the status of professional workers, evidence of control or autonomy with respect to financial details is important, as is evidence concerning the relationship of the parties.
Examine the parties’ agreement and actions with respect to each other to determine their relationship of the parties. Pay close attention to the facts that show how the parties (and others) perceive the relationship.
The following facts may reflect the intent of the parties:
doing business in corporate form, while observing corporate formalities, indicates the worker is not an employee;
filing a Form W-2, Wage and Tax Statement, indicates an employer’s belief that the worker is an employee;
giving the contractor a Form 1099 indicates an employer’s belief the worker is an independent contractor; and
providing employee benefits (such as paid vacation, sick days, and health insurance) is evidence that the worker is an employee.
IRS Publication 963, Federal-State Reference Guide at http://www.irs.gov/pub/irs-pdf/p963.pdf