Employee or Independent Contractor?

Your business may have already discovered the advantages of outsourcing projects or certain business functions, including payroll taxes, insurance, and benefit cost savings. Be aware, however, that the IRS continues to scrutinize whether a worker has been properly classified as an employee or an independent contractor. If an audit reveals a worker’s status has been misclassified, the business may face penalties and additional employment taxes.

In determining whether a worker is an employee under common law, a business is advised to consider all the factors that might indicate its control or the worker’s independence. According to the IRS, factors that provide evidence of control and independence fall into three categories: behavioral control, financial control, and type of relationship. Give us a call if you would like to discuss these factors.