7 Experts Weigh In On the Future of Accounting
Every industry is impacted by the rise of technology and automation, and for many, that can be an...
It's important to understand the difference so you can classify your workers appropriately, otherwise, you might be subject to additional taxes, penalties or fines, interest, and/or other retroactive damages. Generally, you must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. You do not generally have to withhold or pay any taxes on payments to independent contractors. (irs.gov)
If an employer-employee relationship exists (regardless of what the relationship is called), workers are not independent contractors, and their earnings are generally not subject to Self-Employment Tax. Make sure you're following both federal and state regulations to ensure you've classified a worker correctly.
Consider the following categories:
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