Even though the economy and job markets seem to be getting
better, there are still people losing jobs and finding work later as
freelancers and contractors. The Enterprises TV show explains the differences between
the two.
There are specific differences between working as an independent
contractor (freelancer) or employee. It is important to know what type of
worker one is so they can best cover themselves in the matter of pay, work
schedule and taxes.
Freelance work is done in the worker’s own timeframe and
using their own equipment. Freelancers are generally considered independent contractors.
There is no set time when work is start and end. The more freedom someone has
to get the work done, they are indentified as contractors.
In addition, Enterprises TV notes that the U.S. IRS reviews
the three categories of type of work: behavioral control, financial control and
relationship of the parties. A number of facts must fit into these groups before
the service can determine which type of worker someone is. And it all boils
down to control: does the company control when someone works, does it control
the manner in which it is done, or what equipment can be used to get work done?
The more freedom a worker has over these factors, the more likely they are to
be a freelancer and not an employee.
Always read any contracts for work thoroughly before signing
them. Each U.S.
state may have their own laws as to how a worker should be labeled and
reimbursed (or not) for business expenses, such as gas and office supplies. If
one accepts freelance work, be absolutely sure which worker category the job is
paid under. This greatly affects which taxes the worker pays and how taxes are
filed on tax return.
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