Boost eSignature Legitimacy for Independent Contractor Agreement

How to eSign a document: eSignature legitimacy for Independent Contractor Agreement

attention business owners you need to know the difference between an independent contractor and an employee and i'm going to tell you all about it today so what is the biggest difference between an independent contractor and employee it is all about control independent contractors by definition are independent they should operate as an independent business or independent person from your actual company and they should be able to define their own work schedule this means that as an employer you cannot tell a contractor when to work unless you want to give them all of the true benefits of them being an employee the main thing to remember is that independent contractors do set their own hours and they're paid by the project and not on an hourly rate and then they get to choose when they want to work whether that's at 2am on the couch on their computer or say on regular work hours if that's how they choose to work independent contractors also usually own their own business so you should probably not be their only client they are probably in the benefit of running their own business and so they're working and providing projects to a multitude of different business owners and they can work up to 40 hours a week if they want or they can work much more if that's going to benefit them as an independent contractor so again they set their own work hours here and remember you can't control whether or not they work for another client if you start implementing that type of control and you want them to work for you 20 30 35 hours a week it's going to really start looking like you should hire them as an employee an employee in turn is very much what we're all used to in w-2 world as i like to call it you work for a company they designate when you need to be to work when you can leave work the amount of hours you work whether that's part-time or full-time they give you a certain amount of benefits if you are a full-time employee and they always always always do what their company asks of them or they could be fired and let go and for employees if you're an employer you're going to pay your share and withhold income taxes social security taxes and medicare taxes and you're going to share that amount of taxes with your employee of course we all know it's taken out of our pay stubs every month or every two weeks so you're sharing that portion with your employer but for an independent contractor you're just going to pay them a flat amount and you don't have to worry about paying your shares the company for their taxes or withholding any taxes from them so if they have a thousand dollar monthly rate that they ask you to pay as an independent contractor you just pay them the thousand dollars if you do have an independent contractor working for you you don't have to comply with employment and labor laws but if they are an employee then you do have to ensure that you're in compliance with those for all of your workers underneath you you do have to get into the unemployment insurance within your state here's a list of things that you can use to determine whether or not you are hiring on indeed a contractor or an employee the first thing is hours are they getting paid hourly are they getting paid per project the next is who provides the equipment are you giving them the work equipment such as computers and a desk and an office space to work in or are they remotely working providing all of that on their own that's probably more heavily favored towards them being a contractor third is the relationship definite with them are they working with you in perpetuity or do they have set terms of their contract just month to month or is it going to be until you decide to let them go or they leave you of course that's more employee favored there next is invoices if they are actually sending you a monthly invoice or a project invoice that's probably more of a contractor versus you having the employee or someone that's working for you send you all the hours that they worked or they have a set salary every month next is contracts this is really the big one here if someone is sending you an independent contractor agreement it's probably going to be a contractor under the eyes of the law and the irs and finally is the worker that you hired performing core business services for you and are they doing it for a long period of time that's probably going to be an employee versus an independent contractor would provide your business with supplemental type services for a shorter period of time or term a pro tip here if you are your own business owner it's really important to know the differences if you're hiring on virtual assistants or a website designer or a social media manager those are probably going to be independent contractors but you don't want to get into a position where someone really starts working for you full time or part time 20 30 hours a week because it could come back to bite you if the irs or state government says that those actually need to be classified as employees you're going to have to backtrack and not only pay their share of employment taxes and your share of employment taxes but you also could get penalized and have a fine assessed it's also really important to note that for employees if they aren't employees then they don't get the full benefits of unemployment insurance of severance packages of any type of overtime that they should be getting as an employee and the irs and state government continue for that as well ultimately you guys this is a balancing act between you as the employer and boss and your independent contractor or employee so just make sure that if you want it to be an independent contractor it's tipped in favor of them actually being independent and a contractor for your business and if you'd rather have them as an employee it needs to be tipped in favor of them actually being an employee under you as the employer and last but not least please remember that some states and you just want to check this on your state's website if your state has what's called an independent contractor exemption certificate and if your state requires something like that for the contractor to file with the state and you don't have that then the state is probably going to think that anybody working for you that doesn't have that exemption certificate is actually an employee so just be careful there too and check with your local accountant and cpa to ensure that your state doesn't have such a thing if you want to learn more about independent contractors versus employees the legal page has lots of podcasts and blogs about this and if you do want to hire an independent contractor you need to make sure that they sign a contract and the legal page has a really awesome comprehensive template independent contractor agreement that you can send your contractors as the company and you can get that at thelegalpage.com okay my independent content independent contractor contractor diction page 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