MARKETING HUMAN RESOURCES
EMPLOYEE OR INDEPENDENT CONTRACTOR ?
It is critical that business ownerss correctly determine whether the individuals providing services are employees or independent contractors .
Generally , you must withhold income taxes , withhold and pay Social Security and Medicare taxes , and pay unemployment tax on wages paid to an employee . You do not generally have to withhold or pay any taxes on payments to independent contractors . As always , you will want to confirm all information with your human resources professional .
In determining whether the person providing service is an employee or an independent contractor , all information that provides evidence of the degree of control and independence must be considered . Here are some factor to consider :
1 . Instruction a . Independent contractors are independent , thus giving them exemption from any requirement to follow a certain set of work protocols for project completion .
b . An employee on the other hand , will have a set of instructions concerning the location , time and method in which work is to be completed .
2 . Training a . Independent contractors have a specific skill set and do not receive on-the-job education or training .
b . Employees receive training indicative of the company policies and procedures .
3 . Hours of Labor a . Independent contractors determine their own schedule .
b . Employees must follow the control of management by working predetermined hours on a regular basis .
4 . Seeking Additional Gainful Work a . Independent contractors do not fall under restrictions that would disallow them from seeking additional gainful work .
b . Employees may fall under these restrictions depending on employer policy .
5 . Doing Work on Employer ' s Premises a . Contractors control where they conduct their actual work .
6 . Compensation a . 1099 independent contractors are typically paid per project , by commission , in a lump sum or on a periodical basis . A contract or scope of work generally stipulates terms of payment and ideally , payment in case of termination of services .
b . Regular or temporary employees are paid a regular wage by the hour , week or month according to a predetermined arrangement with their employer .
7 . Equipment a . Unlike regular employees , 1099 independent contractors furnish their own materials for work and all necessary tools for project completion .
8 . Multiple Clientele a . Independent contractors are in no way prohibited from working for multiple contracting groups or companies at one time .
b . Employees may be restricted from working for other businesses per company policy .
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KAIA members can consult with HR Partners as part of thier association benefits !
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