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Hiring An Independent Contractor
Leadership-Tools Original Article Employee vs. Independent Contractor - What's The Difference? In addition, a business can also in some instances reduce their overall risk by looking to outside sources of labor such as freelance personnel Whether a person is a freelancer, working on an independent basis or an employee generally depends on the amount of control exercised by the employer over the work being done. Dictating how a job is to be done or limiting the actions of the worker may establish an employer-employee relationship. An independent contractor:
An employee:
The Internal Revenue Service relies on the facts in each case. It does not recognize the validity of any written agreement between the parties. Anyone can get a ruling from the IRS by completing Form SS-8. For most small businesses, an independent worker should not be considered as a substitute for regular employees. Government agencies generally find that people in the work force are legally employees for tax purposes and the cost of being wrong, remitting unpaid payroll taxes, interest and penalties can be very high. Selling of real estate is an example of an industry that depends heavily on the spirit of the independent contractor. Real estate agents are typically not classified as an employee. Instead they agree to work on an independent basis so they only get paid when and if they sell homes. They benefit by associated their name with a well known brand in the market place, but they are fully responsible for doing the job and bring in revenue to the firm. The firm only gets paid if the agent is making money. In other words, any independent contractor who isn't doing his/her fair share in revenue can be dismissed in favor of a more energetic salesperson. On the other hand, each independent worker can jump from firm to firm at any time of their choosing. If you are unsure as to whether or not you wish to hire an employee or an independent contractor, simply consult your accountant.
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