March 2, 2013

Independent contractors have several differences in the way that they should conduct business with an employer, as outlined by the IRS. The difference between an independent contractor and an employee can be confusing for some employers.

Knowing the difference between an employee and an independent contractor is critical for both tax and legal purposes. If an independent contractor is misclassified as an employee the consequences can be costly.

The IRS uses a 20 factor common-law test to determine whether a worker is an independent contractor or an employee, and offers Form SS-8 for employers or workers who need assistance with this determination.