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Employee vs. Independent Contractor: How to Classify Your Workers

As a business owner, you’ll need to make an important distinction every time you hire paid help: Is the worker an employee or an independent contractor?

In this guide we’ll show you how to determine if workers are employees or independent contractors. But first let’s look at why you need to classify your workers at all.

Classifying Workers: A Taxing Situation

One of the most important reasons to classify your workers is to determine which taxes get paid at which time, and by whom.

In the eyes of the IRS, there are four classifications for workers:

  1. Employee
  2. Independent Contractor
  3. Statutory Employee
  4. Statutory Non-Employee

The two classifications that are most common to small business owners are Employee and Independent Contractor.

If your ...


 
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