You might hire employees and independent contractors for similar work, but there are important differences in how they are classified. Here are a few questions to consider:
- Does the company have the right to control what the worker does and how the worker does the job?
- Does the business direct or control the financial and business aspects of the worker’s job?
- Are the business aspects of the worker’s job controlled by the payer?
- Are there written contracts or employee-type benefits such as a pension plan, insurance, and vacation pay?
- Will the relationship continue, and is the work performed a key aspect of the business?
Correctly classifying your workers is essential to avoid issues with taxes or liability.
* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov8
Footnotes and Sources
8. IRS.gov, August 2, 2022
