Employee versus Contractor, do you know the difference? As a small business owner, you may be more inclined to pay people as Vendors or independent contractors, avoid any payroll and simply send them a 1099 them at the end of the year. And while this makes everything easier for you, the business owner, the …
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Employee versus Contractor, do you know the difference?
As a small business owner, you may be more inclined to pay people as Vendors or independent contractors, avoid any payroll and simply send them a 1099 them at the end of the year. And while this makes everything easier for you, the business owner, the IRS might not agree that this is the correct way to pay some people.
The IRS takes all the information about your business into account when determining if your workers are independent contractors or employees. However, the three key factors are:
Behavioral Control: Does your company control where and how the worker performs the job?
Financial Control: Does your company control how the worker is paid and what materials he uses?
Relationship: Does the worker have benefits? Will he work beyond the completion of a specific task?