Quick Answer: What Do I Need To Know As An Independent Contractor?

What classifies you as an independent contractor?

The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done.

The earnings of a person who is working as an independent contractor are subject to Self-Employment Tax..

How do I know if I am an employee or an independent contractor?

If the worker is paid a salary or guaranteed a regular company wage, they’re probably classified as an employee. If the worker is paid a flat fee per job or project, they’re more likely to be classified as an independent contractor.

What documents are needed to hire an independent contractor?

What forms do you need to hire an independent contractor?Form W-9. The IRS requires contractors to fill out a Form W-9, request for Taxpayer Identification Number and Certification, which you should keep on file for at least four years after the hiring. … Form 1099-MISC. … A Written Contract. … Invoices. … Independent Contractor vs. … Helpful Link.

What are the disadvantages of being an independent contractor?

Cons of becoming an independent contractorTax issues: When you’re a full-time employee, your employer handles all of your taxes. … Lack of a steady paycheck: Most employees earn a consistent income, whereas independent contractors must constantly search for work to maintain a steady business.More items…•

How is an independent contractor paid?

Getting paid Since independent contractors aren’t employees, they don’t have a minimum wage or pay rate. Instead, independent contractors negotiate payment as part of their contract. An independent contractor will submit an invoice when they need to be paid.

What I need to know about being an independent contractor?

Independent contractors are the reverse. They tend to get paid for projects, they worry about their own taxes, and work when and where they want. … Independent contractor status usually gives you a lot more autonomy and control over your work. You’re your own boss, set your own hours, and make your own tax payments.