Many entrepreneurs and small business owners don’t know the differences between contractors and employees. This decision is so important when hiring someone to join your small business so Josh Andrews of Gatehouse Law came to Forge to teach us more on this subject!
Contractors:
- They are independent workers, they dictate when and how they work
- Contractors often use their own equipment
- Typically this is a worker that could run a small business performing the work they do for you for multiple companies
Here’s the IRS Test you may need look over:
- Behavioral control
- This is what you tell the contractor about how, when, where or with whom to work
- It’s also how exactly you train the worker
- Financial control
- Reimbursement policy
- Work investment
- Are worker’s services available to others who need it?
- How is the worker paid?
- Can the worker make a profit or loss on the work?
- Type of Relationship
- What does your written agreement say about the intended relationship between you and the worker
- Does the employee receive benefits from you as the employer?
- The permanence of the worker in the business
- Is the worker’s services a key aspect of the company’s regular business?
Who is a contractor?
- Lawyers
- Accountants
- Designers
- Other businesses
- Sales staff (sometimes!)
As the employer, you have a lot more control over employees rather than contractors.
When making this decision, ask yourself a few questions:
- What do you need?
- What do you want?
- How does it look?
We have to understand both options to make the right decision for your specific business! We’ve just hit the highlights for you but if you want to view the full Lunch & Learn, check it out here! Check Forge’s Facebook calendar for future educational events.