Question
A computer training business needs to hire a consultant for a project to revamp the training courseware. Once the courseware is revamped, the consultant' services are complete. Which business compensation structure will pay the consultant and lead to the smallest payroll tax liability for the business? 0000 Hourly Contract Salary Commission
Answer
4.4
(159 Votes)
Alannah
Elite · Tutor for 8 years
Answer
Contract
Explanation
Businesses can compensate their employees using different structures like hourly, salary, commission, or contract. The question requires you to understand these different structures and select the one that will lead to the smallest payroll tax liability for the business. The business will pay the least payroll tax liability when it hires a contractor, since in this payment structure, contractors are not considered employees. Thus, the business is not responsible for withholding income taxes, withholding or paying Social Security and Medicare taxes, or paying unemployment tax on wages paid to an independent contractor.