![]() ![]() DOL: The DOL looks at the type of work and the degree of control over the work when determining if someone is an independent contractor.The independent contractor completes IRS Form W-9, and an employee completes the IRS W-4 tax form. ![]() IRS: The IRS considers an individual to be an independent contractor if the payer controls only the body of work’s results – not necessarily how it’s completed.The DOL and IRS maintain crucial definitions and rules for independent contractor status: How do independent contractors and employees differ? Instead, independent contractors are self-employed (also known as a “business for self”) they can operate and work for several clients simultaneously.Ĭompanies often use independent contractors to avoid hiring staff for short-term needs.ĭid you know?: Independent contractors can be freelancers or run their own entity, such as a sole proprietorship, corporation, LLC, or limited liability partnership. The company pays its contractors, but contractors aren’t employees. Independent contractors differ from traditional employees who’ve gone through a company’s hiring and onboarding process. The arrangement is more about the work than how the contractor executes the work. Both parties enter into a contract that clearly defines the contractor’s duties, pay, type of work, amount of work and more. What is an independent contractor?Īn independent contractor is a person or business that performs services for another person or business. Department of Labor (DOL) and IRS regulations. However, before entering into an independent contractor arrangement, employers must understand how this worker classification differs from that of a traditional employee and what they need to do to comply with U.S. Independent contractors bring employers scheduling flexibility, fewer tax obligations and straightforward working relationships. ![]() More small businesses are using independent contractors than ever, preferring outside consultants and freelancers over hiring full-time or part-time employees.
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