Businesses that grow ultimately need more people to succeed. However, the question remains: should businesses expand by hiring independent contractors, or employees?
What Are The Pros Of Independent Contractors?The pros of hiring independent contractors include:- control over the manner in which a task is performed
- control over where and when the work is done
- no taxes withheld from paychecks
What Are The Cons Of Independent Contractors?The cons of independent contractors include: - paying for any insurance and health benefits
- responsibility for all taxes on contracting income
- sole responsibility for any injuries arising out of work
How Are Independent Contractors Taxed Differently From Employees?With employees, employers typically withhold payroll taxes from their paychecks. With independent contractors, however, the employer does not withhold payroll taxes because the employer does not provide the contractor with any benefits such as health insurance. Instead, the contractor's income is considered miscellaneous income when income taxes are paid.
What If an Employer Classifies Me As an Independent Contractor?This has become a serious issue because people classified as contractors lose health benefits of being an employee and the employer pays less taxes for that person. If the Internal Revenue Service (IRS) discovers that a person has been misclassified, the IRS may force the employer to pay back taxes and fines as well as provide the employee with health benefits.
What Does "Sole Responsibility" Mean for Independent Contractor Purposes?Sole responsibility means an independent contractor is the only person that can be sued if an injury results from their work, even if it is claimed as the finished product of another. This is a loss of a very high protection typically given to employees by an employer which may be worsened by the lack of employer provided insurance. Should I Consult an Employment Attorney?An experienced employment attorney can help you determine whether you¿re an independent contractor or employee, and explain what rights attach to each classification. The attorney can also assist you in bringing legal action if necessary. |
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