A question I am often asked is: I need help, but I don’t know if I need an independent contractor or an employee.
It’s a tough question and it’s not easy to answer without delving into your business. I would like to give you some food for thought so you can think on the right path.
First, the reason you care is because if you treat someone as an independent contractor, yet the IRS or DOL sees them as an employee, you will be subject to fines, penalties, and back taxes. OH! Consider these questions before you decide.
Is the project based on work? If you have a project or “to do” item that you can deliver and you’re only concerned with the outcome and not how it’s done, get a contractor.
Does the person need to be in your office to complete work at certain times? If you’re telling someone when and where you’ll be working, you need an employee.
Do you care when one person does the work? If you’re only concerned with the work that gets done, regardless of whether it’s at 8 am or 8 pm, as long as it gets done by a certain date, get a contractor.
Is it okay if they have other customers? If they can work for you and others at the same time, get a contractor.
My favorite resource for this is the IRS. This PDF post 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?
