Comparison between an Employee and a Contractor
Are you aware of the difference between employees and contractors? It’s a trick quiz to solve. Actually, many businesses owners don’t get it right. So let me tell you the right answer. Usually, employees are more dependent on their company compared to contractors, while contractors usually don’t rely on the company they work for. Rather, the contractors get their own tools and resources when working. Besides, they usually focus on finishing the job by the due date, not being on time at the set workplace or location.
If you Misclassify Employees as Contractors…
Even if you misjudged classifying your employee as a contractor by mistake, it can cause a bit of a trouble. It will tackle you legally and financially. For example, paying for unpaid wages, like overtime etc. Owed employee-related costs such as employee benefits, compensation benefits, retirement contributions, Medicare and Social Security contributions and unemployment / health insurance. Also the state and federal taxes are part of the applicable penalties.
So employers should pay close attention to how you specify the difference between a contractor and an employee.
Refer to the Links Below to Learn More About…
The differences between employees and contractors from IRS page.
Follow the Links Below to find the Employment Laws applied in different states.