A question I am often asked is: do I need help but don’t know if I need an independent contractor or an employee?

It’s a tough question and cannot be easily answered without digging into your business. I would like to give you a little thought so that you think about the right path.

FirstThe reason you care is because if you treat someone like an independent contractor, yet the IRS or DOL sees them as an employee, you will be subject to back taxes, penalties, and penalties. OH! Consider these questions before making a decision.

Is the work project based? If you have a “pending” project or item that you can deliver and you are only concerned with the outcome and not how it is done, get a contractor.

Does the person need to be in your office to complete work at certain times? If you are telling someone when and where you will work, you need an employee.

Do you care when a person does the job? If you are only concerned about the work getting done, regardless of whether it is at 8 a.m.

Is it okay if they have other clients? If they can work for you and others at the same time, find a contractor.

My favorite resource for this is the IRS. This PDF post does a great job of helping you think in the right direction. You can find it by searching the IRS website.

What has been your experience with employee vs. independent contractor?