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This Simple Difference Could Cost You Thousands in Taxes Take the time to clearly define your employees and subcontractors.

By Mark J. Kohler

Opinions expressed by Entrepreneur contributors are their own.

What's the difference between an employee and a subcontractor?

Entrepreneur Network partner Mark J. Kohler understands why business owners hate asking this question: It's tedious. Rather than properly examine the difference, many business owners choose instead to take a shortcut and simply label everyone in question a subcontractor, giving them a 1099 tax form and washing their hands of the whole situation.

However, being sloppy on state and federal tax forms can be dangerous. If your subcontractors turn out to be employeees instead, you could be on the hook for a lot more money than you realize.

Click play to learn about how you can tell the difference between an employee and a subcontractor and save yourself the time, energy and money that cutting corners could cost in the long run.

Related: Should You Invest in a Self-Employed Pension?

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Mark J. Kohler

Entrepreneur Leadership Network® VIP

Author, Attorney and CPA

Mark Kohler, M.PR.A., C.P.A., J.D., is a highly respected Founding and Senior Partner at KKOS Lawyers, specializing in tax, legal, wealth, estate, and asset protection planning. With a reputation as a YouTube personality, best-selling author, and national speaker, Kohler is dedicated to guiding clients through complex legal and financial landscapes to achieve their American Dream. He also serves as the co-founder and Board Member of the Directed IRA Trust Company and has launched the Main Street Certified Tax Advisor Program to train CPAs and Enrolled Agents nationwide. As the co-host of The Main Street Business Podcast and The Directed IRA Podcast, he simplifies intricate topics like legal and tax strategy, asset protection, retirement, investing, and wealth growth. Mark Kohler's commitment to helping entrepreneurs and small business owners attain success and financial security has made him a trusted expert in the field, benefiting countless individuals and businesses in navigating the financial and business world with confidence.

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