Independent Contractor or Employee?
What is the difference?
What is the difference between an independent contractor and an employee?
It is super important to understand.
One of the biggest mistakes we see is improper classification of employees and contractors. Many businesses use contractors to save money and headaches but actually treat them as if they were full-time employees.
For example, if the company controls the work (how and when employee does the work) and provides the tools & equipment for the job, this is most likely an employee. If the company does not provide instruction on how or when the work should be performed (contractor works independently)and does not provide tools or equipment, this may very well be a 10-99 employee.
The IRS has strict guidelines on the differentiation.
If you have questions on whether your employees are properly classified, we can run you through a duties test to ensure that you are not making a mistake in classifying properly. Mistakes like these set you on a serious path towards big problems so we have put together a free checklist for you.