Especially in this down economy, many business owners are utilizing the services of independent contractors and freelance workers over hiring part-time or full-time employees. As an entrepreneur, knowing when to hire an independent contractor or bring in a new employee requires much consideration.
First, let’s differentiate the two. If you go by the IRS definitions, an individual whose work is controlled by you—if you direct them and you dictate what is to be done and how it is to be done, then you have an employer/employee relationship. If on the other hand you have control or input on just the result of the work done but not the methods and means of achieving that result—then, they’re an independent contractor. As a business owner, you need to be careful in hiring and paying independent contractors if they should be made an employee. Remember, the tax collector never sleeps. The IRS provides criteria and classifications for workers if you’re still concerned about the difference.