Subcontractor or Employee?
Accounting Advice for Better Business
It can be tricky and a bit of a gray area to determine whether someone is your employee or an independent contractor. And there is no one single rule. Instead, the IRS looks to the ‘degree of control’ you have over the means and methods over an individual performing the work. Generally lawyers, contractors, and subcontractors who follow an independent trade or profession and offer their services to the public are not employees. However, if you control how the individual does the job, how he or she gets paid, if you provide tools and supplies, or if you provide employee benefits (insurance or vacation pay) and exert overall control over the details of job performance, you and the individual likely have an employer – employee relationship.
By Karin Lichtenstein, Owner Capital Bookkeeping, Inc.