The National Directory of Certified Public Accountants

Ask A CPA - Independent Contractors

Employee Or Independent Contractor Comparisons

From the employer's point of view, it is always better for the worker to be treated as an independent contractor. The employer can save Social Security taxes, Medicare taxes, workers compensation insurance, disability insurance and unemployment taxes which are all mandatory payroll related expenses. Employers which have pension and medical benefit insurance plans cannot discriminate and must include virtually all full time employees that meet certain requirements. For this reason it usually pays to be an employee. However the truth is, the status of whether one can be properly treated as an independent contractor is not so clear cut. There is a 20 factor test used to determine ones status. Please contact a CPA in your area to ascertain how these rules apply to your situation

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