Independent Contractors vs Employees

By selfemployedblog | April 6, 2006

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Since I am a freelancer, I am usually the one who is the contractor in a business relationship. But for most small businesses, you sometimes need to outsource services that you don’t have the time or skill to provide to your clients.  Laws differentiate in each state but for the most part, it’s important to know what separates a contractor from an employee.  According to IRS.gov, the definition of a contractor is as follows:

The general rule is that an individual is an independent contractor if (the person for whom the services are performed) has the right to control or direct only the result of the work, and not what will be done and how it will be done or method of accomplishing the result.

It’s important to know the difference and not incorrectly classify an employee as a contractor and vice-versa.  You may be liable for employment taxes if you incorrectly classify a employee as a contractor. Learn more about the differences between an employee and independent contractor.

Topics: Business Resources, Self Employment |

2 Responses to “Independent Contractors vs Employees”

  1. Linda Rogers
    7:36 am on April 8th, 2006

    Hi Tina,

    I just posted on the topic of “false self-employment” and thought that I’d see if others had blogged on a similar topic. My post is from the Canadian experience but it is interesting to see that the US definition of self-employment and employment is the same.

  2. Tina
    10:42 am on April 8th, 2006

    Linda, that is a great post and will benefit many people who are confused on the differences between employee status and contractor status.

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