Policy for an independent contractor

Policy for an independent contractor

A person who is engaged by the company to offer services could be regarded as an independent contractor. The contractor is subject to the control or direction of the company only concerning the result and not the means used to achieve that result. Determination of the status of the person as an independent contractor is to be established before that individual executes the service. Departments are to seek authentication of the status of the independent contractor from disbursement services before initiating any service commitment or drafting any payment request form(s). Independent contractors will be issued a Federal tax Form 1099-MISC in the first month of the year before their services if they are paid at least $1000 in the previous calendar year. Sometimes, the independent contractor payment might be subjected to tax withholding.

Policy for an independent contractor

For an individual to be determined as an independent contractor, the employer/employee relationship must be deemed not to exist about the Internal Revenue Service guiding principles. They outline three main categories of behavioral and financial management and the correlation of the parties:

Financial control: Facts that provide direction or control on how the trading attributes of the worker’s activities are conducted (major investment, unreimbursed costs such as rent and utilities, marketing, wages of assistants, licensing, insurance, supplies, etc.)

Behavioral control: Facts that provide the degree of direction or control on how the worker executes the precise task for which he/she is employed (providing directions or guidance.)

Relationship of parties: Facts that provide how the parties perceive their relationship (employee’s benefits, objectives of the parties, written agreements, permanency, discharge)

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