Companies and employees across the country have been finding it hard in recent years to keep up with the laws concerning employment status. While contract work can be appealing to both sides, it's important to know the rules to keep all concerned safe from possible penalties.
To determine whether a worker is an independent contractor or employee, look closely at the financial control the company has over the employee. Is the worker incurring costs which are not being reimbursed? This points toward a contractor situation since most employees can expect work expenses to be reimbursed while contractors have up-front costs related to their trade (such as tools and materials).
Another factor is how the worker is paid. Contractors have the ability to set their payment amount before starting a job. While some do set hourly rates, most contractor jobs are flat fees and work the hours they set themselves. Independent contractors can also seek other business opportunities and are free to work on several projects at any given period while most employees are expected to have regular work hours.
Contractors also pay their own taxes and have to file a 1099 with the IRS if they earn more than $600 from a client. Even so, the IRS suspects that 15% of workers are misclassified.
If you're looking for more information, Kelli M. Horne of Ezine Articles has written even further on the subject.
To determine whether a worker is an independent contractor or employee, look closely at the financial control the company has over the employee. Is the worker incurring costs which are not being reimbursed? This points toward a contractor situation since most employees can expect work expenses to be reimbursed while contractors have up-front costs related to their trade (such as tools and materials).
Another factor is how the worker is paid. Contractors have the ability to set their payment amount before starting a job. While some do set hourly rates, most contractor jobs are flat fees and work the hours they set themselves. Independent contractors can also seek other business opportunities and are free to work on several projects at any given period while most employees are expected to have regular work hours.
Contractors also pay their own taxes and have to file a 1099 with the IRS if they earn more than $600 from a client. Even so, the IRS suspects that 15% of workers are misclassified.
If you're looking for more information, Kelli M. Horne of Ezine Articles has written even further on the subject.
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