The Difference Between Independent Contractor and Employee [Infographic]

By Matt Zajechowski

Whether it be hiring full-time employees or freelance or temp workers, how you classify your employees is important.  Small business owners that improperly classify workers can face IRS trouble, whereas employees who are improperly classified may not be getting the pay and benefits they deserve. Wunderland Group has put together a really helpful infographic shown below that highlights important information regarding employee classification for both employees and business owners doing the hiring.

The first part of the graphic highlights the differences between an independent contractor and an employee.  This information is useful for small business owners who aren’t sure how they want to classify potential employees. Independent contacts require little training by the company and are usually hired on a per project basis.  They also do not receive benefits from the employer.

The second section of the graphic covers very useful information for small business owners about what they need to know about job misclassification. Some employers improperly classify workers because they think classifying an employee as an independent contractor saves them time and takes them off the hook for providing benefits and having to pay taxes. This is wrong and can result in trouble with the IRS which no small business owner wants.  This can result in both audits and financial penalties from the IRS.

There are a few things that small business owners can do to protect themselves.  Working with a staffing firm so that workers can become employees of the staffing firm frees the small business from a possible IRS audit for misclassification. Small business owners can also consult with an attorney to make sure they are compliant.  The most important thing small business owners can do is to ensure that they are classifying their workers correctly and are fairly compensated with the pay and benefits they deserve.

Contractor-vs-Employee-Risks-and-Rewards-Infographic

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Matt Zajechowski
Matthew Zajechowski is an outreach manager for Digital Third Coast.

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