Contractor or Employee in West Valley City: The Records Each One Needs

What records does a contractor need, and what does an employee need?

An employee gets a full payroll file: a W-4, an I-9, withholding records and a W-2. A contractor gets a W-9, a payment history and, above the threshold, a 1099-NEC. The records follow the classification, so the classification has to come first.

That decision isn't yours to make by preference, and it isn't this post's. IRS rules decide it, and your CPA applies them to your facts. What you control is keeping the right records once it's settled.

Who decides whether someone is a contractor or an employee?

The IRS rules do, applied to the whole working relationship. The IRS page on independent contractors and employees sorts the evidence into three groups: behavioral control, financial control and the type of relationship. IRS Topic 762 lists what counts as financial control, including unreimbursed expenses, the worker's investment in tools, how the business pays them and whether they can make a profit or take a loss.

No single factor settles it, according to the same IRS page, which also says to document each factor you used. If it's still unclear, the business or the worker can file Form SS-8 and have the IRS decide, though the IRS says a determination can take at least six months.

So bring your CPA the facts. Who sets the hours, who supplies the tools, whether there's a written contract, whether the work is a core part of what you sell. Then keep that note in the worker's file.

Does working remotely make someone a contractor?

No. The IRS guidance on remote workers says a remote worker is your employee under the common-law rules if you can control what's done and how it's done, even if they can choose to work remotely. Where they sit doesn't change the answer. Who controls the work does.

What goes in a contractor's file?

A W-9 before the first payment, every invoice, and a payment history that shows how each payment was made. The IRS Form W-9 page says the form is how a payee gives their correct taxpayer identification number to the person who has to file an information return about them. Asking for it with the first invoice is easy. Chasing it in January isn't.

The 1099-NEC threshold went up. The 2026 IRS instructions for Forms 1099-MISC and 1099-NEC say the minimum rose to $2,000 for tax years beginning after 2025, so you file a 1099-NEC for each person you paid at least $2,000 for services during 2026 in the course of your business. The same instructions set the 1099-NEC due date at January 31, on paper or electronically.

Two details change what you report. Personal payments aren't reportable, only payments made in the course of your trade or business, per the IRS instructions. And payments made by credit card or through a third-party network go on Form 1099-K from the payment company rather than on your 1099-NEC, per the same instructions. That's why the payment method belongs in the contractor's payment history.

What goes in an employee's file?

A signed W-4, a completed I-9, the employee's Social Security number and a record of every paycheck. The IRS page on hiring employees covers the first three, and says to withhold as if the employee is single if they don't hand in a W-4.

After that, the employee is on the business's tax calendar. Form 941 reports the income tax, Social Security and Medicare withheld each quarter, along with the employer's share. Utah wants a new hire report within 20 days of the first day of work, per the Utah New Hire Registry handbook, which ties that report to people who are employees for federal income tax withholding. At year end, the IRS Form W-2 page says an employer files a W-2 for each employee who had income, Social Security or Medicare tax withheld, or whose pay met the reporting threshold even with nothing withheld, and the Utah State Tax Commission wants W-2s filed electronically by January 31. The IRS recordkeeping page says to keep employment tax records for at least four years after filing the fourth quarter return for the year.

What happens in the books when a contractor becomes an employee?

You end up with two records for one person, and that's fine. The contractor payments stay under the vendor record for the months before the switch, and payroll starts from the first paycheck. Don't move the old payments into payroll after the fact.

Your CPA tells you what to file for each part of the year. The books just need to show the two halves cleanly, with dates, so that question takes minutes instead of an afternoon.

What does West Valley City add once you have employees?

A short list of registrations, and the city spells them out. West Valley City's business licensing steps say that if you will have employees, you're required to register with the IRS for an Employer Identification Number, to remit federal tax withholding and FUTA payments, and with the State Tax Commission for a state withholding number. The same page says state unemployment insurance is required for companies with employees, and workers' compensation insurance is required of all employers.

Every item on that list is framed around employees, which is one more reason to settle the classification before the first payment rather than after. The city license is its own step. The city's business licensing page says a business with a place of business in West Valley City limits must get a West Valley City license, with a separate license for each type of business and each place of business. If you run the business from your home in the city, the types of business licenses page says you'll need a Home Business License, though the licensing page makes an exception for a home business that grosses less than $2,000 a year, which signs an affidavit instead. Our West Valley City page has more on the registrations that come with a first employee.

When is it worth getting help with these records?

If you pay one contractor a year, a W-9 in a folder and a January reminder will do. Once you've got staff and contractors at the same time, the records start to overlap, and that's where mistakes creep in.

Melanie Mathews runs Ivory Balance Books from South Jordan and serves Salt Lake and Davis County, plus clients nationwide, and her focus is businesses that have outgrown basic bookkeeping. 1099 filing covers the contractor side, and payroll covers employees, including state payroll registrations. The year-end package for your CPA goes to the person who helps you apply the classification rules.