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Central Washington University Employee/Independent Contractor Determination Checklist NOTE: This form should be used by a department to assist in determining whether to hire a person as an employee

How to fill out independent contractor vs employee

How to fill out independent contractor vs employee

1. Understand the differences between an independent contractor and an employee. Independent contractors are self-employed individuals who work for themselves and provide services to clients or companies on a project basis. Employees, on the other hand, work directly for a company and are typically subject to the company's control and direction.
2. Determine the nature of the work relationship. Independent contractors are usually hired for specialized or temporary work that is outside the regular business activities of a company. Employees, on the other hand, are hired to perform ongoing roles within the company's regular business operations.
3. Familiarize yourself with the legal requirements. Independent contractors are responsible for paying their own taxes, obtaining their own insurance, and are not eligible for employee benefits. Employees, on the other hand, have taxes withheld from their paychecks, receive benefits, and may have other legal protections and entitlements.
4. Use the appropriate forms and contracts. When hiring an independent contractor, a company should use a written contract that outlines the scope of work, payment terms, and duration of the project. For hiring an employee, a company typically requires completion of employment forms such as a job application, tax withholding forms, and any applicable employment agreements.
5. Consult with legal and tax professionals. It is advisable to seek advice from legal and tax professionals to ensure compliance with relevant laws and regulations when classifying workers as independent contractors or employees.

Who needs independent contractor vs employee?

1. Companies or individuals who have short-term or specialized projects that require specific expertise may need independent contractors.
2. Companies looking to reduce costs and avoid the administrative responsibilities associated with hiring employees may prefer to hire independent contractors.
3. However, companies requiring workers for ongoing roles, or those who want more control over the work performed, may opt to hire employees instead of independent contractors.
4. Some professions, such as construction, consulting, and freelance writing, often rely heavily on independent contractors for their flexibility and specialized skills.
5. Ultimately, the decision between hiring an independent contractor or an employee depends on the specific needs and circumstances of the company or individual hiring.

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What is independent contractor vs employee?

An independent contractor is a self-employed individual who provides services to clients under a contractual agreement, while an employee is a person who works for an employer under a contract of employment, receiving wages or salary and benefits.

Who is required to file independent contractor vs employee?

Employers are required to file information about both independent contractors and employees for tax reporting purposes. Independent contractors typically must fill out Form 1099, while employees are documented using Form W-2.

How to fill out independent contractor vs employee?

To fill out the necessary forms, independent contractors should complete Form 1099 detailing their earnings, while employers must fill out Form W-2 for employees, which includes their wages and tax withholdings. Proper documentation of hours worked and payments is essential for both.

What is the purpose of independent contractor vs employee?

The purpose of distinguishing between independent contractors and employees is to clarify tax obligations, labor rights, and benefits. It helps in ensuring compliance with labor laws and tax regulations.

What information must be reported on independent contractor vs employee?

For independent contractors, Form 1099 typically requires reported income earned during the year. For employees, Form W-2 must include total wages paid, federal and state taxes withheld, and other deductions.