Great article from the IRS site on “Independent Contractor vs. Employee”. This is always a difficult issue for Business Owners and many times the determination is skewed by an emotional Business Owner who desperately wants to avoid payroll taxes.
The IRS doesn’t have a clear set of yes/no questions for this. No flow chart or decision tree. But, for a cool head, usually there isn’t much question about worker classification. If you are unsure, best bet is to classify the worker as an employee. Call the office if you have any questions.
IRS Summertime Tax Tip 2008-24Are your workers independent contractors or employees? The answer can have a profound impact on how much tax you pay as a small business owner. Knowing whether your workers are or are not employees will affect the amount of taxes you must withhold from their pay. It will affect how much additional cost your business must bear, what documents and information they must provide to you, and what tax documents you must give to them.