The Contract Shop® Knowledge Base

What is an Independent Contractor?

Spoiler alert: An independent contractor is not the same as an employee!
TC
Written by The Contract Shop®
Updated 8 months ago

First thing's first: An independent contractor is NOT an employee.

An independent contractor is someone who provides services to a business under a contract (a written one!). Independent contractors do not typically work regularly for the business but only when there is available work. The business only has control over the end product but not when or how it’s completed. An independent contractor pays their own taxes, whereas employees generally share the tax burden with their employer. 

A business cannot control how or when tasks get done by an independent contractor. While you can set a deadline for an independent contractor, you can’t demand that they are online at a certain time or deliver the project in a certain way. When you start directing the independent contractor as you would an employee, that’s where the water gets muddy.

Treating an independent contractor as an employee can have some serious tax repercussions for your business (as in, you might have to pay back taxes for the whole time you’ve been working with someone in an employee capacity). That’s why it’s so important to be clear and straightforward with contractors’ role in your organization and to understand the rules so you don’t break them.

To learn about what mistakes you might be making with your independent contractors, check out this blog post here.

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