MBO Partners provides an outstanding list of ten differences between employees and independent contractors:
1. Independent Contractors Operate as Their Own Business
Independents may be sole proprietors, or have an incorporated business. They have built these businesses around specialized services they provide—it’s not uncommon for independents to have a business name and perform work for multiple employers. Think of your relationship with an independent contractor as a business-to-business relationship. It can be easy to fall into the trap of treating them like an employee, but doing so can put you at risk for misclassification.
2. Independent Contractors Are Experts in Their Industry
While employees typically receive some sort of training surrounding their job duties, independent contractors bring specialized expertise to a project or task. As a client, you’re not responsible for providing them with training—pretty nice, right? Independent talent can be a great way to fill business needs.
While independents come from and work in virtually every sector of the economy, most demonstrate a high level of specialization in their industry. In fact, the majority of independents say they get work assignments because they offer a specialized skill that requires certification, special training, or education.
3. Independent Contractors Openly Market Their Services
Remember, because independent contractors are running their own business, they need to sell and market their services. Just because they have a long-term contract with you doesn’t mean they aren’t allowed to take on additional work for other clients as well.
4. Independent Contractors Are Engaged for a Specific Project or Time Period
Unlike traditional employees whose jobs may encompass a wide variety of duties and tasks, independent contractors are only responsible for performing the services outlined in a contract or Scope of Work (SOW). A clear SOW provides the foundation for a good working relationship, outlining the expectations of both parties. It should include details about the work to be done, a timeframe, a process for managing changes, and payment terms.
5. Independent Contractors Submit Invoices for Work Completed
Rather than working for a specific salary, independent contractors submit invoices for their work. Pay and payment terms should be discussed during initial contract negotiations. Independent contractors may have a standard billing rate for their services, or their rate may vary depending on the type of work you are looking for. Be sure to discuss how and when you’d like the contractor to invoice you for work completed, as well as how and when you will pay them after receiving an invoice.
Read the full story at Independent Contractors vs. Employees: 10 Differences You Need to Know | MBO Partners
