What is the difference between an independent contractor and an employee?

Question

can someone maybe answer this in possibly a sentence or 2 or atleast so it makes sense? thanks

Answer 1

An independent contractor is hired to produce a result, for example,to build a building. When he starts, how he sequences the work, what means and methods he uses, are all up to him. You are generally not liable for the acts or omissions of an independent contractor.

An employee is hired to do what he is told. He told what to do, when to do it, how to do it. He is under the control of the principal. You are generally liable for the acts and omissions of yor employees committed in the course of fulfilling the employment contract.

Answer 2

It is not a straightforward answer. The issue revolves around the amount of control and who determines it. So if you can set your hours, have your own business number, determine how you do your job, and determine your pay rate there is a good chance you are an independent contractor. Now some poster say that if you are an independent contractor if you have to provide your own tools. That is not always the case take for example a computer programmer their tool is a computer and software. A business can provide an independent contract some tools and training as the question always revolves around who controls the job. With that said there is another quirky exception if do a job long enough for the same person / company (e.g around 2 years) you may be considered to be an employee even though initially you were an independent contractor which means length of job always can come into play. Usually for tax purposes you will be treated as an indpendent contractor for the first two years and then as an employee once you hit that two year mark.

Answer 3

The difference has nothing to do with taxes. (Though they are withheld by different parties under each)

The main difference the IRS is concerned with is that an independent contractor gets to set their own schedule, be their own boss, etc while doing a job for someone else. A company can have a contractor become an "employee" by starting to control the employees time, breaks, duties, just as it would a regular employee. (This creates a major gray area as to where a contractor stops being a contractor and becomes an employee thus subjecting the company to emploement laws/taxes for the person)

Answer 4

An employee gets his taxes and other money taken out of his pay by his employer. This is then turned into the Govt. An independent contractor is the employer. He carries his own insurance and sends his taxes to the govt. The person or company that has the independent contractor working for them, fillout a 1099 tax form and sends it to the govt at years end to certify how much they paid the contractor during the year. This is often done with clubs that hire bands since they are paying a fee but the bandmembers are not their employees. Those are the basics.

Answer 5

An employee has taxes taken out of there pay and are working directly under the employer.
An independent contractor works for himself, the contractor and employer negotiate a deal, signs the contract. It is up to the independent contractor to finish the job on the agreed time frame in the contract and the contractor pay his own taxes, they are not taken out when he is paid.

Answer 6

I have been both. There may be a thousand little legal things that I am missing but the big items, as I see it are:

Employees are part to the company. They have taxes withheld, Social Security handled, and the company insures and or bonds them.

As an independent contractor I was responsible for filing my papers and paying income taxes quarterly, I paid both halves of the Social Security, I paid my own Workman's comp premiums and bought my own liability insurance and bond.

All the company pays an independent is one check for the job. The independent is responsible for all the stuff an employer's accounting department would normally do.

There may be other things I am not thinking of at the moment but the big thing for me was seeing that all the government agencies and insurers got their cut.

Answer 7

It is advisable that you should investigate your problem at the legal search engine

www.LawSolver.com

On LawSolver, you can explore any legal question and instantly obtain free attorney responses. Free attorney answers to similar inquiries:
(1) "What is the difference between an independent contractor versus an hourly employee?"
(2) "Legally, how can you tell the difference between an independent contractor or an hourly employee?"
(3) "Rights as an independent contractor - Avvo"
(4) "If my former employer tried to misrepresent me as an independent contractor instead of as an employee to unemployment, what do I need to do?"
(5) "I think that I was wrongly misclassified as a independent contractor instead of an employee, but not sure what I should do. - Avvo"

Plus, resources and articles:
(1) "Employee vs. Independent Contractor: What is the difference? - Avvo"
(2) "Hiring Independent Contractors - FindLaw"
(3) "Hiring Independent Contractors for Your Rental Activity | Nolo"

Answer 8

As an independent contractor, I am responsible for all of my overhead - insurance, taxes, Social Security, etc....
The employer who hires me pays only my estimate to do the project - no overtime, disability or workman's comp, taxes, Social Security and so on.
Pretty much the same as when you call a plumber or electrician to do work for you - they are not your employee, they are merely contracting to do work for you at an agreed fee.

Answer 9

It is way around offering benefits or being held responsible for hiring illegals. Person or group of people start business such as gardening services, and employers pay the business not the individual employee.