Independent Contractor vs Employee: What’s Better for Your Business?
Hiring staff and workers is an important part of any business plan. Choosing a new hire for your business is always a concern. Working directly with an accounting firm in Las Vegas is an important step in protecting your business from employment and tax problems. Fair, Anderson & Langerman can help you identify tax implications depending on which route you choose and what makes the most sense for your business. When you need to hire a trained professional for a limited time, consider hiring an independent contractor over a traditional employee. Below are differences between traditional employees and independent contractors.
Independent contractor: An independent contractor is not a directly supervised member of your business. They set their own work hours, pay and work styles. Hiring an independent contractor reduces your obligation to pay social security and Medicaid taxes on their behalf. It also removes the need to provide benefits such as healthcare. Legally, the IRS defines an independent contractor as a worker who controls what will be done, how it will be done and where. If the employer controls these details, the contractor is an employee – regardless of what the position is called.
Factors that determine if workers are independent contractors are:
The worker pays for their own insurance and expenses.
The worker sets dates and times for meetings.
The business does not control the number of hours worked.
The worker sets their own price for the services provided.
Employee: An employee is a member of your staff that is directly supervised. The IRS defines an employee as any member of your staff that performs work if you control what they do and how it is done.
There are many factors that can determine a worker’s classification as an employee:
If the worker is eligible for bonuses or prizes through the company.
The worker is reimbursed for expenses.
The company assigns specific days and time for work to be performed.
The company provides healthcare or other benefits.
The worker must report to a supervisor to have work approved.
Hiring independent contractors is a crucial component to successfully running a business: Consultants, web developers, content writers, publicists and accountants all typically operate as independent contractors. Choosing the right hire for your position will allow your company to gain access to highly-trained specialists without retaining them long-term.
Call the Las Vegas accounting firm Fair, Anderson & Langerman at 702-870-7999 to discuss how hiring the right workers can benefit your business’s bottom line.