Summer Hiring? Here’s How to Handle Seasonal Workers, Interns, and Payroll Compliance Without the Headache

Hiring for the summer?
That’s exciting—until the IRS gets involved.

While onboarding interns or part-time help sounds simple enough, summer hiring is one of the most common ways small business owners get tripped up on payroll, compliance, and classification.

And yes, even a single misstep—like putting a W-2 employee on a 1099 “just for the summer”—can cost you big.

Let’s Clear This Up: Not Everyone’s a Contractor

You’re not alone if you’ve ever 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 hard truth:
If you control when, where, and how someone works—you’re probably supposed to issue a W-2.

The IRS doesn’t care if it’s part-time, seasonal, freelance, or “just a favor.” If they look like an employee, they are one—and they want to see payroll taxes, not contractor payments.

Need the official word? See IRS guidelines on worker classification

Interns? Yes, They Usually Count Too.

Many businesses think unpaid internships are a gray area. But unless it’s tied to a formal educational program with no expectation of compensation, the Department of Labor may classify your intern as an employee.

That means:

Minimum wage laws apply
You may owe payroll taxes
Workers’ comp coverage could be required

Rule of thumb: If they’re contributing to your business, they probably need to be on payroll.

Don’t Miss Out on This: The Work Opportunity Tax Credit (WOTC)

Here’s some good news:

If you’re hiring people from certain target groups—like veterans, long-term unemployed, or summer youth employees—you might qualify for the WOTC, which can reduce your federal income tax liability by up to $2,400 per qualifying hire.

But:

You have to apply before hiring
The paperwork needs to be filed with your state agency
Most businesses never realize they’re eligible

More info? Explore the WOTC program here

Other Things to Nail Down (Before Your First Payday)

Set up correct federal and state withholding
Ensure you have an active payroll system (manual payments often miss required filings)
Collect and retain Form I-9s and W-4s
Check if local labor laws require sick leave or additional reporting for part-time workers
Know if you need to pay overtime—even if it’s “just for the summer”

The Bottom Line: Don’t Wing Payroll

We get it—your focus is on growing your business, keeping clients happy, and getting help in the door. But ignoring payroll compliance (even for “just a few weeks”) can lead to:

Penalties for misclassification
Missed tax credits
State audits
Unhappy former employees filing 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 the right way—without overcomplicating things or drowning in red tape.

If you’re planning to bring on part-time, seasonal, or intern help in the next few weeks, let’s talk.
We’ll help you stay compliant, minimize tax risk, and maybe even find some credits you didn’t know existed.

Contact our office before you run that first paycheck—we’ll help you do it right from the start.

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