Have you ever wondered if you were in violation of an employee/employer relationship by calling someone a contractor? This is generally the case when a business wants to avoid paperwork, taxes, overtime, and other employee headaches.
The general rule is that an individual is an independent contractor if the payer 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. The earnings of a person who is working as an independent contractor are subject to Self-Employment Tax and they have to take care that.
An individual is not an independent contractor if they perform services that can be controlled by an employer (what will be done and how it will be done). What matters is that the employer has the legal right to control the details of how the services are performed.
Folks, the IRS will be cracking down on these differences over the next few years to increase tax revenue, and you want to make sure that you are playing by the rules.
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