Why to hire an Independent Contractor?
Distinguishing between independent contractors and employees is crucial, as it influences your initial hiring decisions and tax withholding procedures, while also helping you avoid potential legal ramifications. Understanding this disparity is essential for making informed choices in your business operations.
Independent contractors and employees are not the same, and it's important to understand the difference. Knowing this distinction will help you determine what your first hiring move will be and affect how you withhold a variety of taxes and avoid costly legal consequences.
What’s the Difference?
An Independent Contractor:
Operates under a business name
Has his/her own employees
Maintains a separate business checking account
Advertises his/her business' services
Invoices for work completed
Has more than one client
Has own tools and sets own hours
Keeps business records
An Employee:
Performs duties dictated or controlled by others
Is given training for work to be done
Works for only one employer
Benefits:
Savings in labor costs
Reduced liability
Flexibility in hiring and firing
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