Is Your Worker an Employee or Independent Contractor?

From Wiebe Hinton Hambalek, LLP — Chelsey Marderosian summarizes the factors used by the IRS to determine if a worker is an employee or independent contractor.  She writes:

Consider these behavioral, financial and relationship based factors from the IRS to decide how to classify your workers.

1. Behavioral: if you dictate how to work, this suggests the person is an employee.  Dead give-away: if you hold trainings, you probably have employees.

2. Financial: this one is more cut and dry.  An independent contractor usually has a significant financial investment in the job.  For example, they own their own equipment or aren’t reimbursed for expenses. If you have the opportunity for profit or loss, this is another indicator that you are in business for yourself and may be an independent contractor.

3. Relationship: The IRS defines this as “facts that illustrate how the business and worker perceive their relationship.”  Benefits may be the most significant piece to determining the relationship. Employees are far more likely to receive benefits….

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