Hiring for the summer?
This is exciting—until the IRS gets involved.
While onboarding interns or part-time help may appear to be a simple process, summer recruiting is one of the most popular ways for small business owners to become caught up in payroll, compliance, and categorization.
Yes, even a single error, such as putting a W-2 employee on a 1099 "just for the summer," can cost you a lot of money.
Let’s Clear This Up: Not Everyone’s a Contractor
You are not alone if you have said:
"We're just paying them a flat rate—it's easier that way."
"They're only here for 10 weeks."
"They're a student; it's not really a job-job."
Here's the harsh reality:
If you control when, where, and how someone works—you’re probably supposed to issue a W-2.
The IRS does not mind if work is part-time, seasonal, freelancing, or "just a favor." If they appear to be an employee, they are—and they expect to receive payroll taxes rather than contractor money.
Need the official word? See the IRS criteria for worker classification.
Interns? Yes, They Usually Count Too.
Many businesses believe that unpaid internships are a grey area. However, unless your intern is part of a formal educational program with no prospect of income, the Department of Labor may designate them as employees.
That means:
- Minimum-wage laws apply.
- You may owe payroll taxes.
- Workers' compensation coverage may be necessary.
As a general rule, if they contribute to your firm, they should be on payroll.
Don’t Miss Out on This: The Work Opportunity Tax Credit (WOTC)
Here’s some good news:
If you recruit people from specific target groups—such as veterans, long-term jobless, or summer youth employees—you may be eligible for the WOTC, which can decrease your federal income tax burden by up to $2,400 per qualifying hire.
But:
- You must apply before hiring.
- The papers should be filed with your state agency.
- Most firms do not understand they are eligible.
More information? Explore the WOTC program here.
Other Things to Nail Down (Before Your First Payday)
- Set up proper federal and state withholding.
- Ensure you have an operational payroll system. Manual payments frequently miss mandatory filings.
- Collect and keep Forms I-9 and W-4.
- Check whether local labor regulations demand sick leave or additional reporting for part-time workers.
- Know if you have to pay overtime—even if it's "just for the summer"
The Bottom Line: Don’t Wing Payroll
We understand—your priority is to develop your business, keep clients satisfied, and get aid in the door. However, neglecting payroll compliance (even for "just a few weeks") might result in:
- Penalty for misclassification
- Missed tax credits
- State audits
- Unhappy former employees filed claims you didn't see coming.
Need a Hand Sorting It Out? Call Us Before You Hire
We've helped hundreds of small business owners set up summer payroll correctly, without complicating things or drowning in red tape.
Let's discuss about hiring part-time, seasonal, or interns in the next weeks.
We'll help you stay compliant, reduce tax risk, and possibly even locate credits you didn't know existed.
Contact our office before running your first paycheck; we'll help you get it right from the beginning.
