How to Prove You Are an Independent Contractor, Not an Employee

When you provide a service to a business, you are probably considering yourself an independent contractor, not an employee of the business. After all, you went through the trouble of forming a business, didn't you?

Sometimes the IRS will see things differently, however.

There are some basic considerations that will prove you are an independent contractor and not an employee when tax time rolls around. These considerations can have a huge impact on your taxes and the taxes of the companies you contract with.

First, you must not expect the company to train you. Employees get training; independent contractors are presumed to know how to do the work and provide their own training. A small amount of training, such as teaching you the particular way the company hiring you does things is ok.

You make your own schedule, and determine where you work and how you work. This also means you do not typically work at the company's location. You decide what steps you will take to get your contracted work done. You do not have to produce reports about your project.

Your services are not an integral part of the company's operations. You also work for more than one company. Your services must be generally available to others who wish to hire you.

You are responsible for your own office and other supplies as well as hiring and managing any assistants you require.

You are paid by the project, rather than weekly or monthly, and cannot be fired if you are producing the contracted work. Similarly, you cannot quit until you have produced the contracted work.

And, of course, you take on the risk of either making a profit or suffering a loss.

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How to Prove You Are an Independent Contractor, Not an Employee

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