Neil &  Company CPAs, PC

A Professional Corporation

1184 North 15th Street, Bozeman, MT 59715

 

Phone: 406-587-9239

 

September 2021

Employee vs. Independent Contractor: What's the Difference?

Happy african American young woman in glasses stretch hand for handshake greeting introducing to someone, smiling black biracial millennial female hr agent in spectacles get acquainted at meeting

Tax rules differ for employees vs. independent contractors, so consider income taxes when you need to hire help for your business.


HIRE AN EMPLOYEE
The IRS looks at the degree of control you have over a worker's behavior and finances, along with the type of relationship you have. For example, the IRS deems workers to be employees if you control when and how they perform the work, control how they are paid and provide them with supplies to do the job. This means you'll need to collect and pay payroll taxes and abide by federal and state employment laws.


REMAIN INDEPENDENT
There is no magic set of rules that make a worker an employee or not. But having a worker sign an independent contractor agreement doesn't automatically mean they're a contractor. You'll need to look at the totality of the relationship between you and the worker. And if you're ever in doubt, you can submit a Form SS-8 for the IRS to determine your worker's status.


SUBSCRIBE

Enter your Name and Email address to get
the newsletter delivered to your inbox every month.


CONTACT US

Enter your Name, Email Address and a short message. We'll respond to you as soon as possible.

The information and opinions contained in this web site are obtained from sources believed to be reliable, but their accuracy cannot be guaranteed. The publishers assume no responsibility for errors and omissions or for any damages resulting from the use of the published information. This web site is published with the understanding that it does not render legal, accounting, financial, or other professional advice. Whole or partial reproduction of this web site is forbidden without the written permission of the publisher.