Uber: Taxi Services - Research Paper Example

UBER COMPANY INVESTMENTS MEMORANDUM From Norman’s Case Study Summary of Facts: The main reason for dwelling on this aspect of multi-tasking is for the sake of enabling us to make proper analysis and recommendations involving the Norman’s case. Norman happens to be a student and a very viable entrepreneur at the same time. This kick-started when he began offering Taxi services courtesy of an umbrella Company known as Uber that had introduced the taxi services app compatible to the mobile phones. This hence made it easier for Norman and other Taxi vendors to carry on with their operations in a very smooth and viable manner. The only hurdle for Norman is that, as much as he is getting involved into this lucrative venture, the fact remains that he also has to complete his mandates as a student. This is the reason why he even opted to be taking some of his revisions and assignments within his car through proper utilization of that outstanding app. Up to this point, Norman feels a little bit excited that he is not only a mere student but a CEO of his own small enterprise. This hence brings out some sort of discussion whether Norman is in a position of being an independent contractor or an employee. The main understanding can be attained by giving out some distinctions between these two aspects. While the "independent contractor" differs from the standard employee, exact designation based on your responsibility has to be agreed on before starting any task so as to avoid unnecessary inconveniences Research Issue: Is Norman an employee or an independent contractor? How should he carry out his operations? Case Analysis: With increase in economic hurdles and the cost of living in the contemporary world, various possible measures or opportunities have to be fully utilized by individuals so as to ensure success in all sectors of life. This can probably be possible if the aspect of multi-tasking and other such- like commitments are put into consideration. Human multitasking refers to apparent individual’s performance of managing more than a single task simultaneously. This term was derived from the aspect of computer multitasking. A good example is when an individual takes phone calls and types an email at the same time. Multitasking has often resulted in time wastage due to the aspect of context switching and has apparently caused more errors because of insufficient attention. As much as multitasking can be viewed as being the key towards success in some of the sectors, it might only be applicable to a few individuals who have set their minds right. Otherwise, research shows that it often leads to various mishaps such as poor performances due to lack of concentration, time wasting, dampness, reduced productivity, misconception, among others (Killian, Johnny, et. al,  2002, 2004) The aspect of independent contractors can looked at in three varying perspectives. Mostly, there have been scenarios of difficultly in definition of status of what makes up an independent contractor. It has often been outlined by the common law guidelines, Labor Standards Act, and at times through some court decisions (Stewart $ Dave, 1980). Many states and the IRS have adopted some of the universal law principles for definition of an independent contractor. The primary focus of these rules is on the control level that that has been accorded to an employer over a particular product or service. This hence means that, a situation should be analysed whether an employer really defines or fails to define what is being done in line with its accomplishments. These principles further define the independent contractor position by means of compensation. For instance, if an individual is within his/her employers payroll with constant accordance of a stable pay-check, such an individual clearly qualifies to be termed as an employee unlike an independent contractor, whose modes of payments occurs in a very different manner. There are other extensive factors that can be looked at in trying to come up with a valid and concrete distinction of an independent contractor from an employee. Such considerations can be taken to include: If a worker is in a position of supplying personal equipments, tools and materials, If the worker has got freedom of choice whether to be discharged from work at own wish or even failure to make it for work without any fear of employment lose, If he/she is in full control of employment hours, and whether the entire work is permanent or temporary. On the other hand, the nature and state of the work often assists in bringing out the sense of relationship between these two mediums. When any form of work is viewed as being fundamental to a particular business, it is highly probable that the individual is an employee. In contrast, a form of work that is considered as being non integral and temporary might imply the status of an independent contractor (Stewart $ Dave, 1980). In a cognitive attempt towards interpretation of some provisions outlined by Fair Labor Standards Act on discern amongst the independent contractors’ and employees’ status, some federal agencies and courts have established what is termed as the "economic reality test." This aspect majorly looks into the worker dependence on the ultimate business in which he/ she operates. If an individual gains a huge salary portion from the business, then chances are often higher that such an individual is an employee. This test on the other hand factors in things such as the level of proficiency, the work’s integral nature, the parties intent, as well as the payment of both social security benefits and taxes (Lowy & Peter, 2005). The courts on the other hand often use the aspect of “controls right" test in trying to give out a proper distinction between an employee and an independent contractor. Here, there is a claim that when the employing party is in control of ways in which work is undertaken and there is a sense of product delivery, the relation amongst the parties can be taken to be an employer/employee relationship. For a scenario whereby the employer fails to have authority with regards to how the entire party accomplishes the designated work but only gives some outline requests, the ultimate relationship between these parties is hence that of independent contractor/ hiring party (Stewart $ Dave, 1980). Norman’s status based on whether he qualifies to be an independent contractor can on the other hand be analysed based on the aspect of tax liability. This is in the sense that, an employers liability towards taxes is largely determined by an individual’s employment status. When an individual is an employee, the employers should pay federal and state unemployment tax, the social security taxes, as well as the payment of the compensation premiums to the insurance Fund. This aspect highly distinguishes these two elements since the employing party does not have an eligibility of making any of these payments when it comes to the issue of independent contractors. Should employers mistakenly term a worker as a sovereign contractor, they might find themselves accountable for the precedent taxes including federal unemployment and FICA tax. Safe harbors that can allow for the use of an independent contractor status by the employers without succumbing to any form of penalties include: past acts of treating related employees as sovereign contractors as well as the full existence of prior IRS review whereby payment of taxes was not allowed. Form all these assertions, Norman can basically be classified as one of the independent contractors. This is mainly based on all the above comprehensive and extensive distinctions that have been made regarding the qualities of both the employee and an independent contractor. It can be summarized that, certain elements often defines a worker largely as an independent contractor in each and every case as it has been specifically exemplified in the Norman’s situation. Some of these features include; failure to rely on business as a main source of livelihood, working at on pace as stipulated in the agreement, ineligibility for the employer provided advantages and retain of a degree of independence and control. As long as the independent contractor remains to be his/ her own boss, work often stays within the classification of written or oral contract and sticks to definite requirements (Lowy & Peter, 2005). With regards to Norman’s rates of taxes and expenditures, the tax level seems to be very minimal. This is simply because as an independent contractor who is fully recognized by that venture’s top operational management. He is not liable to any form of direct taxes from the state since he works operates under the umbrella of the Uber Company. This means that Uber is the one that is responsible for any imposed tax dues with regards to the venture. The often pay taxes that can be classified as the corporate tax. Generally, tax refers to a financial levy or charge that is often imposed upon each and every taxpayer by a state. Failure to comply with tax payments is always punishable by law. They are also imposed by various administrative divisions. On this note, taxes are comprised of indirect or direct taxes and are either paid in cash or labor equivalence. From the above study on taxes, Norman is not eligible to any form of direct taxes from the state. This was earlier witnessed when he was initially signing up for that venture as a driver. This is where he was surprised to find out that he did not have to fill a W-4 form, and was also informed to wait for form 1099 towards the end of that year but not form W-2 that is often known for compliance reporting. This is where he is informed that he was qualified to be an independent contractor; and thus all his company payments shall definitely be tax free In spite of relieve from tax payment, the other main thing that Norman needs to establish so as to ensure smooth running of this venture is the aspect of coming up with an extensive and comprehensive profit and loss account. This will largely reflect and bring out a clear distinction between his income and expenditures. Failure to do so might finally end up being detrimental towards his long-term existence in the venture especially due to losses that might be incurred in one way or the other. There are various expenditures that Norman often incurs in this business venture. Apart from the original expenditure towards buying a very luxurious car at a whooping amount of about $70,000, in spite of it being an asset, main expenses can often be on servicing and maintenance costs as well as the aspect of depreciation. The other major expenses can be taken to include the annual car insurance that goes for $3600, annual liability insurance for $1000, a smart phone that averages at around $600, a cell phone plan at around $1800 per year, as well as the traffic fines and parking fees that are mostly incurred on daily basis. So, Norman should basically be in a good position of making a cognitive financial analysis so as to be conversant with the virility level of this outstanding venture. In short, he should be in a position to determine the profitability ration of this ultimate enterprise whereby he is an independent contractor. Conclusion: From the above discussions, it can be ascertained that Norman indeed qualifies to be an independent contractor. Based on this fact, if this venture is to thrive well, Norman should avoid making a mistake of using his personal fee towards fixing some of the inputs such as the gasoline and the cell phone budget. The profits that will be attained from the venture should be responsible for all these minor and almost regular expenses. The other factor that should direly be put into consideration is the car itself. As much as it remains to be his main valuable asset, it is subject to massive depreciation rate as he gets along. So, all the business out comes should be in a proper position of catering for all these wows. Works Cited: Killian, Johnny H, George Costello, and Kenneth R. Thomas. The Constitution of the United States of America: Analysis and Interpretation : Analysis of Cases Decided by the Supreme Court of the United States to June 28, 2002. , 2004. Print. Lowy, Peter A. U.s. Federal Tax Research. Washington, D.C: Tax Management Inc, 2005. Continually updated resource. Stewart, Dave N. Employee or Independent Contractor: An Examination of the Relevant Variables Employed by the Federal Courts in Deciding the Question. , 1980. Print. Read More