Independent Contractors vs. Employees: Which One?

As a business owner, deciding whether someone is an independent contractor or an employee isn’t about preference — it’s about how the work is actually performed. Getting this wrong can lead to payroll tax issues, penalties, and unnecessary stress. That’s why classifying your worker properly matters.

An independent contractor typically:

• Works on a project or contract basis
• Controls their own schedule and methods
• Uses their own tools and equipment
• May work with multiple clients
• Is paid per project or flat fee
• Receives a 1099-NEC

Contractors are responsible for paying their own self-employment taxes.

An employee typically:

• Works ongoing for one employer
• Follows a set schedule
• Uses company tools and equipment
• Is supervised and directed by the employer
• Is paid hourly or salary
• Receives a W-2 with taxes withheld

Employers must withhold payroll taxes and comply with employment laws.

The key factor is control — who controls how and when the work is done? The IRS looks at behavioral control, financial control, and the overall relationship.

If you’re unsure how to classify a worker or have questions on getting your worker paid correctly,
I can offer you support.