question.jpgIn HR/Employment Law

Should I hire an independent contractor or an employee?

Although independent contractors are technically cheaper for the company, because you don’t have to worry about paying taxes, withholding Social Security, or paying benefits (as well as abiding by discrimination laws), it won’t matter at all if you treat the worker like an employee. The IRS makes the classification, not the employee. And if the employer calls a worker an independent contractor, but treats the worker like an employee, the employer can get in a lot of trouble with the IRS; indeed, so aware is the IRS of the tax benefits of misclassifying an employee, it frequently audits companies who hire large numbers of independent contractors. If your “independent contractor” is actually an “employee,” the company can be hit with huge back taxes, fines, and interest payments.