Search for commonly asked questions
What’s the Difference Between an Independent Contractor and an Employee?
Have you ever wondered why some people are employees, and others are independent contractors? Even though both do work and get paid, their jobs are not the same. Let’s look at how they’re different.
What Is an Employee?
An employee works for a company. They are part of a team and usually have a boss who tells them what to do. Employees often work set hours, like 9 a.m. to 5 p.m. They might get paid every two weeks.
Roles and Responsibilities of an Employee:
- Follows the company’s rules
- Uses tools and equipment provided by the company
- Gets training from the company
- Works on tasks the boss gives them
Costs for the Employer:
- Pays the employee’s wage
- Pays taxes to the government
- Gives benefits like vacation pay or health care
What Is an Independent Contractor?
An independent contractor works with a company, but not for it. They are their own boss. They decide how and when to do their work. They might work for many people at once.
Roles and Responsibilities of an Independent Contractor:
- Chooses how to do the job
- Uses their own tools or supplies
- Pays their own taxes
- Finds their own work
Costs for the Company:
- Pays only for the job that gets done
- Does not have to pay for taxes or benefits
A Quick Example
Let’s say a company needs someone to fix their computers.
- If they hire an employee, the person works in the office every day and gets a regular paycheck.
- If they hire a contractor, the person comes in just to fix the computers and then leaves. They send a bill for the work.
As a home sharing provider you are a contracted service provider (independent contractor) because you provide a social benefit you are not taxed on the income you receive.