Are you interested in hiring a worker for your business, but aren’t sure whether they should be classified as an independent contractor or an employee? The IRS has provided a list of 20 questions to help determine the classification of the worker. In this article, we will discuss the IRS contractor vs employee 20 questions.
1. Does the worker have control over the work they do?
If the worker has the ability to decide how the work will be done, they’re considered an independent contractor.
2. Is the work being supervised by the employer?
If the employer is supervising the work being done, the worker is considered an employee.
3. Is the worker required to work specific hours?
If the worker is required to work set hours, they are considered an employee.
4. Does the worker receive training from the employer?
If the employer provides training, the worker is considered an employee.
5. Are the services being provided on a continuing basis?
If the worker is providing services over a long-term period, they are considered an employee.
6. Is the worker required to follow specific instructions?
If the worker is given specific instructions on how the work should be done, they are considered an employee.
7. Who provides the tools and equipment necessary to complete the work?
If the worker provides their own tools and equipment, they are considered an independent contractor.
8. Is the worker paid by the hour or by the job?
If the worker is paid by the hour, they are considered an employee.
9. Is the worker reimbursed for expenses incurred while doing the work?
If the worker is reimbursed for expenses, they are considered an employee.
10. Does the worker have significant investment in their own tools or equipment?
If the worker has a significant investment in tools or equipment, they are considered an independent contractor.
11. Is the worker required to attend meetings or training sessions?
If the worker is required to attend meetings or training sessions, they are considered an employee.
12. Can the worker hire and pay their own assistants?
If the worker has the ability to hire and pay their own assistants, they are considered an independent contractor.
13. Is the worker paid a salary or an hourly wage?
If the worker is paid a salary, they are considered an employee.
14. Does the worker have the ability to make a profit or incur a loss?
If the worker has the ability to make a profit or incur a loss, they are considered an independent contractor.
15. Is the worker performing a critical function for the business?
If the worker is performing a critical function for the business, they are considered an employee.
16. Does the worker have the ability to work for other businesses?
If the worker has the ability to work for other businesses, they are considered an independent contractor.
17. Is the worker provided with benefits such as health insurance or retirement plans?
If the worker is provided with benefits, they are considered an employee.
18. Is the worker provided with paid time off or vacation time?
If the worker is provided with paid time off or vacation time, they are considered an employee.
19. Is the worker considered to be part of the business’s core operations?
If the worker is considered to be part of the business’s core operations, they are considered an employee.
20. Is there a written contract between the worker and the employer?
If there is a written contract between the worker and the employer, it can help determine the worker’s classification.
These 20 questions can help business owners determine whether a worker should be classified as an independent contractor or an employee. It’s important to correctly classify workers to avoid potential legal issues and penalties. If you’re still unsure about the classification, it’s best to consult with an HR professional or employment attorney to ensure compliance with IRS regulations.