Independent Contractor or Employee? Before You Hire, IRS Says Know The Difference!

According to the Internal Revenue Service website, when considering a or other professional, it is critical that you, the employer, correctly classify the individuals providing services as employees or independent contractors.

Employers must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee.

Employers do not generally have to withhold or pay any taxes on payments to independent contractors.

If you classify this individual incorrectly, the IRS can hold you liable for taxes for that worker, and impose penalties as well.

According to the site, an employer has "the right to control or direct only the result of the work done by an independent contractor, and not the means and methods of accomplishing the result." An employee is classified as "anyone who performs services for you is your employee if you can control what will be done and how it will be done."

For more in-depth reading on this topic, visit the IRS website here.


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