Employee v contractor checklist

A contractor can be: self-employed. There’s a special scheme for self-employed contractors and sub. Independent Contractor vs. In many businesses, especially those moving through a period of growth or transformation, you’ll likely find a mix of employees , contractors and possibly also workers making up the work force.

Even if the worker chooses his own schedule and how to carry out their work, the CRA will also look to see who has the right to control the work. Classifying an employee as an independent contractor with no reasonable basis for doing so makes employers liable for employment taxes.

Certain employers that can provide a reasonable basis for not treating a worker as an employee may have the opportunity to avoid paying employment taxes. What is the difference between an employee and a contractor? The former will evidence an employment relationship the latter self-employment. This includes people working in a triangular employment situation. The hire or reward is almost always a wage or salary.

If you hire a worker you must check if they are an employee or contractor. If you previously hired a worker without checking, review your decision now to make sure you got it right. Do you need an employee or independent contractor ?

Use this accessible checklist template to find out, or to determine whether current workers are properly classified. Employee or contractor. It is important for businesses who engage contractors to be mindful of the tests and indicators contained within this checklist to avoid potential legal exposure associated with sham contracting. This template is perfect for current employees or independent contractors to see which ones are set in an hourly, fixe or contracted rate.

But where we most often see problems occurring for our clients is when relationships have evolved over time. The mutual understanding of a particular working relationship may not in fact be supported at law at all. Deciding between an employee or contractor. Contracting has emerged as an alternative to the traditional employment relationship. Sometimes contracting is necessary, where you require specialist skills that cannot easily be obtained by recruiting.

For an employee, the employer pays PAYE tax and ACC on the employee’s behalf, and the employee is paid net wages or salary. In special situations the company or person the contractor is contracted to may deduct withholding tax on their behalf. Many employers are looking to downsize staff and bring in independent contractors to fill the gap. The points given below are noteworthy, so far as the difference between employee and independent contractor is concerned: A person hired by the employer, to work on a regular basis, in exchange for a fixed remuneration, is called an employee.

With the new healthcare laws into effect combined with the cost of workers compensation, providing benefits to employees has become more expensive than ever before. The legal test as to whether someone is a contractor or an employee is not straightforward. This checklist will help you determine whether someone you have engaged to perform work is a genuine independent contractor or whether they are really an employee.

Grab our interactive checklist to help keep track.

Quickly identify whether someone is an employee or contractor. If the business provides paid time off (vacation, sick time, etc.) or other benefits to the worker in addition to any pay, they are almost certainly an employee. The EEOC lists factors for distinguishing between an employee and an independent contractor. The status of an employee could be established even if only some criteria are met.

The law is pretty clear about the rules and perks of being an employee vs. If you have additional questions about the law in your area, speak with an employment attorney today. An employee provides services exclusively at the employer’s discretion.

Contractors work to produce a service or product for the benefit of the Principal. Service Provider Information - Fill in ALL applicable information. Company name or DBA: Tax Identification Number: EIN SSNTIN check one box.