You may be required to give the worker a Form 1099-MISC, Miscellaneous Income, to report what was paid to them.If you provide services for one or more businesses or organizations, you are considered either an employee or independent contractor. When your worker is an independent contractor As an employer, you are also required to withhold all applicable federal and state taxes and provide the worker a Form W-2 showing the taxes withheld. You are required to file quarterly reports for all wages and pay employment tax. If they do not receive benefits, theycould be either an employee or an independent contractor.Īs an employer, it is your responsibility to maintain a correct social security number along with verification, using the e-verify system, to determine the employee’s right to work status. Opportunity for profit or loss - if the worker can realize a profit or incur a loss, this suggests they are in business for themselves and may be an independent contractor.Įmployee benefits - if the worker receives benefits, such as insurance, pension, or paid leave, this is an indication the worker may be an employee. However, a significant investment is not necessary to be an independent contractor.Įxpenses - if the worker is not reimbursed for some or all business expenses, then they may be an independent contractor, especially if the unreimbursed business expenses are high. While there is no precise dollar test, the investment must have substance. Significant Investment - if the worker has a significant investment in the work, they may be an independent contractor. This may be significant if it is difficult to determine status based on the facts however, if the worker meets the criteria of being an employee, the written contract has no bearing. Written Contracts - a written contract may show what both you and the worker intend. Is the worker required to enter a bid for a job?Īre federal and state taxes withheld from the amount paid to the worker?ĭo ou carry Worker’s Compensation on the worker?ĭo you require the worker to carry any type of insurance? How is the worker paid (hourly rate, commission, salary, etc.)? May the worker terminate the services at any time without liability?Īre the worker’s services subject to termination by the firm ay any time without liability? Whose business name does the worker operate under when performing services?ĭoes the worker hold themselves out to the public to perform similar services?ĭoes the worker advertise their services?įurnishing tools, materials and place of workĭo you provide the worker tools or materials?ĭoes the worker wear a uniform or special clothing?ĭo you provide the pace of work for the worker? Who determines the price of the goods sold? Is the worker allowed to engage helpers to assist in the work? Is the worker supervised or given instructions? Is the worker required to perform services during regular working hours? Some of the questions you should consider would include: Extent of control In each case, it is very important to consider all the facts-no single fact provides the answer. These relevant facts fall into six main categories: There are many facts considered when deciding whether a worker is an independent contractor or an employee. Neither the employer, nor the worker, has the authority to make this distinction. Under Mississippi Law §71-5-11 J.(14), the Mississippi Department of Employment Security (MDES) is the governing authority to make this decision. Is your worker an independent contractor or an employee?
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