How Fresh Legal Perspective Can Help
In a world where businesses seek the tax and management advantages of engaging independent contractors and individuals desire a more favorable status as an employee, both individuals and businesses need the guidance to understand the big picture and the implications of each classification.
As a business owner, you likely have pressing questions like: How much control do I have over independent contractors’ work product? How can I protect myself from potential wrongful actions of the contractors I engage? Can I require contractors to agree to any non-compete and confidentiality restrictions?
If you are a business owner who is engaged by others as an independent contractor, you need to understand your tax implications and implement safeguards and clear expectations with your clients.
Independent Contractor Agreements benefit both contractors and business owners by creating a written understanding of the relationship by outlining such things as the scope of services being provided, the expected results of those services, and the limitations of those services and the relationship. Should a problem or dispute ever arise, both parties can rely on the protections contained in the independent contract agreement, as long as it was drafted properly.
Fresh Legal Perspective can help empower both contractors and business owners by reviewing, negotiating, and drafting independent contractor agreements. If a dispute ever arises from such a contract, we can advocate for a resolution as beneficial as possible for the client.
If you are ready to get answers to your questions and implement the precautions that may be needed for the long-term success of your business, contact an experienced business lawyer at Fresh Legal Perspective.
What is the Difference between an Employee and an Independent Contractor?
In determining whether you or an individual you have hired is an employee or an independent contractor, the IRS evaluates three categories of factors among other items to assist in the determination.
- Behavioral factors – such as the degree of control that the company has over the worker in regards to the specificity of what and how the worker performs their tasks.
- Financial factors – such as the method in which the worker receives payment, what is the financial link between the company and the worker, and who incurs expenses for performing the job at hand.
- Type of relationship factors – such as whether there is a contract between the two parties, any benefits that come from the company to the worker in addition to direct payment, and whether the work is limited or is the work expected to be continuous.
What Type of Worker is an Employee?
An employee is usually a worker who has set hours and pay directed by the company. An employee usually does not supply his or her own tools or materials for work. In an employee relationship, the company usually has the ability to direct the worker how to perform the job in addition to what needs to be completed. An employee may receive benefits in addition to direct pay, such as health and retirement benefits. If a worker is determined to be an employee, the company may be required to pay additional taxes for the worker such as unemployment and social security taxes.
What Type of Worker is an Independent Contractor?
An independent contractor is usually a worker who supplies his or her own tools and supplies for a job and usually has the freedom to perform the work in the fashion he or she prefers, as long as the completed project meets the requirements of the company. Contractors usually have a temporary working relationship with the company as opposed to a continuous relationship. If you are an independent contractor, your earnings will be subject to self-employment taxation.
This portion of the site is for informational purposes only. The content is not legal advice.