Employee vs员工与. Independent Contractor.pptxVIP

Julie Camp, Director, Payroll Jennifer Collins, Manager, Accounts Payable Employee vs. Independent Contractor What is an Independent Contractor? An independent contractor is a person, business, or corporation that provides goods or services to another entity under terms specified in a contract or within a verbal and physical agreement. USG Definition: An individual who performs services for the institution where the institution has the right to specify the result to be accomplished by the work, but not the means and methods by which the result is to be accomplished. In the United States, any company, or organization engaged in a trade or business that pays $600 or more to an independent contractor in one year is required to report this to the Internal Revenue Service using Form 1099-MISC. This form is a report of monies paid to independent contractors. Independent contractors do not have income taxes withheld from their pay as regular employees do. What is an Employee? USG: An individual who performs personal services for the institution where the institution has the right to control and direct the individual who performs the services, not only as the result to be accomplished, but also as to the details and means by which that result is to be accomplished. It is not necessary that the institution actually direct or control the manner in which the services are performed; it is sufficient to establish an employee-employer relationship that the institution has the right to do so. Consequences Misclassifying workers as independent contractors can cause substantial tax issues as well as penalties for failing to pay employment taxes and failing to file required tax forms. Actual Cases From Keep Up To Date on Accounts Payable: A California based company was charged with misclassifying a group of its employees as independent contractors. The end result was $11 million in penalties. This company had employees and independent contractors handling many of the sam