There is a very thin line that separates an employee from a private contractor, it’s very important for every business, to ensure that they are in compliance with the government in terms of differentiating the private contractors and or employees that work for them. Making this distinction without a checklist alone, while tempting isn’t advised. You may assume that it will cost you a large amount of money to have this done, but there are templates that feature an Independent Contractor Checklist, to help make this distinction clear and best of all, it’s more cost effective than hiring someone to do it for you, who more than likely will be using a similar Independent Contractor Checklist.
For the sake of avoiding confusion among business owners as to who qualifies as an independent contractor, the government introduced a guideline known as an Independent Contractor Checklist. This checklist is basically questions about the worker’s circumstances. With this in mind, other organizations have what’s known as an Employee or Independent Contractor Checklist that makes the process painless.
Using the Independent Contractor Checklist
The template itself consists of 2 main sections. The first section is a description of the control, relationship and financial factors within your organization, such as, ‘Does the individual work off site’. The second section does not have the typical yes or no question as with most checklists in general, but employee or contractor, in this scenario the answer would be X under contractor not employee. Same goes when answering if the employee works onsite, the answer would be X under employee not contractor. At the end of the template, if you determine that the phrase ‘contractor’ has more Xs than answers for the phrase ’employee’, that’s how you make that distinction.
To ensure that you accurately complete the Independent Contractor Checklist here are some tips to help you avoid costly errors:
- The 20 factors are used only as a guideline, depending on your business you may have other factors that you need to include on the checklist
- Be as truthful and accurate as you can.
- Ensure that you have all the necessary documents organized to prove anything you checked off.
- Do not hire anyone as a private contractor without first completing the form, hire someone prior may result in penalties and fines.
- When in doubt, seek professional advice about any questions.
You can download the Independent Contractor Checklist template for free today!
Download: Independent Contractor Checklist
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