A question I am asked often is – I need help but I don’t know if I need an independent contractor or an employee?
It’s a difficult question and not one easily answered without digging into your business. I would like to give you some food for thought to get you thinking on the right path.
First, the reason you care is because if you treat someone as an independent contractor however the IRS or DOL sees them as an employee you will subjected to fines, penalties and back taxes. OUCH! Consider these questions before you decide.
Is the work project based? If you have a project or “to do” item that you can hand off and are only worried about the outcome and not how it’s done – get a contractor.
Does the person need to be in your office to complete the work at certain times? If you are telling someone when and where they will work – you need an employee.
Do you care when a person does the work? If you are only concerned with the work being done regardless if it is at 8am or 8pm as long as it is done by a certain date – get a contractor.
Is it OK if they have other clients? If they can work for you and others at the same time – get a contractor.
My favorite resource for this is by the IRS. This PDF publication does a great job of getting you thinking in the right direction. You can find it by searching the IRS website.
What has been your experience with employee vs. independent contractor?