Independent contractors operate with greater autonomy and are responsible for managing their own businesses. Many professionals, such as speech therapists and special education specialists, find the flexibility of independent contracting appealing. However, contractors must ensure they comply with IRS regulations and establish themselves as legitimate business entities.  As an independent contractor, you are also responsible for your own business marketing, accounting, training and equipment and you are offering your services to the general public and looking for clients.

Key Considerations for Worker Classification

The IRS uses a 20-point checklist to determine whether a worker is classified correctly. Below are just six of the critical factors to consider:

1. Behavioral Control:
   • Does the company control or have the right to control what the worker does and how they perform their job? Employees are often subject to company policies, training, and oversight.
2. Financial Control:
   • Who has control over the financial aspects of the worker’s job? Independent contractors typically manage their own expenses and may have opportunities to make a profit or incur a loss.
3. Type of Relationship:
   • Does the worker receive benefits such as insurance, vacation pay, or retirement plans? These benefits often signify an employer-employee relationship.
4. Investment in Equipment:
   • Independent contractors generally provide their own tools, equipment, and resources, while employees use company-provided supplies and resources.
5. Opportunity for Profit or Loss:
   • Contractors bear the risk of making a profit or experiencing a loss based on their efficiency and business management. Employees, on the other hand, receive a fixed wage or salary regardless of company performance.
6. Permanency of Relationship:
   • Is the relationship ongoing or project-based? Employees often have an indefinite relationship with their employer, whereas contractors are usually engaged for specific projects or timeframes.