Frequently Asked Questions
What is the difference between a contractor and an employee?
The primary difference between a contractor and an employee lies in their relationship with the company they work for. Contractors are technically independent entities, not employees of the company. They are hired by the company to complete specific tasks within a specified time frame, as outlined in a contractor agreement. This agreement is a written document that details the relationship between the company and the contractor, including the tasks to be completed, the time frame for completion, and the payment for the work. On the other hand, employees are part of the company's workforce and are subject to the company's rules and regulations. They receive a regular salary and benefits, and their tasks and responsibilities are typically broader and less defined than those of a contractor. Contractors can also hire subcontractors to help them complete their assigned tasks. Subcontractors are essentially contractors working under other contractors. They sign an agreement with the contractor, not the company, and are managed by the contractor. Like contractors, subcontractors are also considered separate entities by the IRS and are responsible for paying their own self-employment taxes and managing their own work and schedules.
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