Short Answer: An independent contractor is someone who provides services to your business but remains in business for themselves.
Why It Matters: The label in your agreement does not determine whether someone is an independent contractor. Government agencies evaluate the actual working relationship, including who controls the work, how the individual is paid, whether they work for others, who provides the tools and equipment, and how integrated they are into your business. Misclassification can result in taxes, penalties, wage claims, benefits liability, and other legal exposure.
Common Mistakes: Assuming a written agreement alone determines classification; treating contractors like employees; choosing contractor status solely because it costs less.
Michelle's Bottom Line: Independent contractor status should be based on the law and the actual working relationship.
