The term ‘independent contractor’ covers a broad range of
individuals. It pertains to a person or business that provides services for
another under an agreement that they are not subject to control, or right of
control. They are different from employees. Some examples are: doctors,
lawyers, accountants, and other professionals who are involved in an
independent trade in which they offer their services to the public. Generally,
they are individuals who are self-employed.

If an employer controls the services of an individual, then that
person cannot be defined as an independent contractor. Even if given the
freedom of action, they are still titled as an employee. This is true as long
as an employer-employee relationship exists. In order to differentiate an
independent from a contractor, then the term and the duration of the agreement
is to be considered. An independent generally agrees to work for until the agreed
service is completed. However, an employee will continually provide their
service for an indefinite time.

Businesses usually face the dilemma of whether to hire an employee
or an independent contractor. This kind of decision is a significant on e. Hiring
independent contractors has many advantages. Namely, some advantages are: overhead
is reduced, health benefits don’t exist, and they are able to work on demand.

Costs are reduced due to fewer expenses in payroll, benefits, and
other aspects. The reason why health benefits aren’t required is because only
employers need to provide it. If no employer-employee relationship exists, then
the need to provide health benefits isn’t there. One must remember that one of
the burdens that a small business has to face is the escalating cost of health
benefits. Finally, independents offer flexibility to the changing demands of
your business. Since they work on demand, you only need to seek after them when
you are in need of their services.

Of course, a few advantages are also carefully taken into account.
When hiring an independent, you may face lack of control. Since they are free
to choose their work, they may have various projects and less commitment than
what an employee could provide. Additionally, fixed rates are not available.
The price that an independent will charge may vary by project.

One thing that should be remembered is that independents must always
be classified as such. If one makes the mistake of classifying them as an
employee, then they are subject to employment tax, interest, and a possible
penalty.

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