Employee or Independent Contractor Checklist Template

As a business owner, it is important to understand the difference between an employee and an independent contractor. This classification is crucial for tax purposes, legal liabilities, and even insurance coverage. To help ensure that you are correctly classifying your workers, we have created an employee or independent contractor checklist template.

First, it is important to understand the difference between an employee and an independent contractor. An employee is someone who works for your business and follows your instructions, while an independent contractor is self-employed and operates their own business. This distinction affects how you pay your workers, the benefits you offer, and your legal obligations.

To determine whether someone is an employee or an independent contractor, you should consider the following factors:

1. Control: Do you control how the work is done, or does the worker have autonomy?

2. Financial: Is the worker paid a set wage or salary, or are they paid per job or project? Do you provide their tools and equipment?

3. Relationship: Is there a written contract outlining the relationship between your business and the worker?

4. Benefits: Does the worker receive benefits such as health insurance or retirement savings plans?

5. Taxes: Do you withhold taxes from the worker`s paycheck, or does the worker pay their own taxes?

By using this checklist template, you can ensure that you are properly classifying your workers and avoiding potential legal issues. Here is what the template looks like:

Employee or Independent Contractor Checklist Template

1. Control

– Does the worker follow your instructions on how the work is done? (employee)

– Does the worker have autonomy on how the work is done? (independent contractor)

2. Financial

– Is the worker paid a set wage or salary? (employee)

– Is the worker paid per job or project? (independent contractor)

– Do you provide the worker`s tools and equipment? (employee)

– Does the worker provide their own tools and equipment? (independent contractor)

3. Relationship

– Is there a written contract outlining the relationship between your business and the worker? (independent contractor)

– Is there an employee handbook outlining the duties and responsibilities of the worker? (employee)

4. Benefits

– Does the worker receive benefits such as health insurance or retirement savings plans? (employee)

– Does the worker provide their own benefits? (independent contractor)

5. Taxes

– Do you withhold taxes from the worker`s paycheck? (employee)

– Does the worker pay their own taxes? (independent contractor)

By using this employee or independent contractor checklist template, you can ensure that you are properly classifying your workers and avoiding potential legal issues. It is important to note that misclassifying workers can result in fines, penalties, and even lawsuits. Be sure to consult with a legal professional if you are unsure about how to classify your workers.