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Essential Independent Contractor Documents
Common Contractor Questions
What’s the difference between an employee and an independent contractor?
While both employees and independent contractors often do the same work it’s how they function that sets them apart. Contractors are typically hired on a job to job basis and are outside of the business’s control—setting their own schedule and using their own equipment. In essence, contractors are self-employed individuals in practice, regardless of how the business relationship is defined on paper.
How are taxes different for independent contractors?
A key distinction between an independent contractor and an employee is what taxes are paid and when. Contractors do not have Social Security or Medicare taxes deducted from their paychecks; rather, they pay self-employment tax. This tax is levied when income taxes are filed, although it’s possible to set up quarterly payments.
Are there any requirements to be an independent contractor?
Some trades require certain licenses and certifications; however, being classified as an independent contractor is far simpler than that. Generally, if you bring your own materials to a job or job-site or if you’re hired for a specific task, you’re likely already an independent contractor. You should check with your state and local governments to make sure you don’t need any licenses to do the sort of work you’re planning on doing.
What are some important things to include in an independent contractor agreement?
An employment agreement for an independent contractor poses some interesting issues. Since a contractor isn’t directly under a company it may be important to include an invention assignment agreement and liability agreements. In addition, since contractors can work with many different businesses a non-disclosure agreement could be beneficial to all sides.
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Rocket Lawyer Specialist (877) 881-0947