Whether you are an Independent Contractor or whether you hire Independent Contractors, there are several considerations you need to remember to maintain the relationship.

Hiring an Independent Contractor means saving on benefits and employment related taxes such as FICA or Medicare. However, simply calling someone an Independent Contractor does not make it so. The IRS, when it examines the working relationship, evaluates how much control the hiring-party has and how much independence the worker has. IRS publication 15-A (Employer's Supplemental Tax Guide Ð Supplement to Circular E) divides this analysis into three categories. These categories are:

(1) Behavioral Control;
(2) Financial Control; and
(3) Nature of the Relationship.

Behavioral Control. If the business tells the worker how, when and where the work is to be done and provides the worker with training, tools, supplies and/or assistants, the worker is probably in the employer/employee realm. The IRS analysis is looking at who (the hiring party or the worker) has the right to control the details of a worker's performance.

Financial Control. The IRS analysis evaluates the financial basis of the relationship, including how expenses are covered, how project investment is handled, how the worker gets paid, whether the worker is involved in other projects and whether the worker has the benefit of making a profit or the risk of loss. As an example, if the worker is reimbursed for business expenses, makes little investment in his own operations, is paid every other week regardless of work progress, and works only for the hiring business, the worker is probably an employee.

Nature of the Relationship. Here the IRS evaluates the other aspects of the parties' relationship. Do the parties have a written contract? Are benefits of any kind provided to the worker? How permanent is the relationship and how important is the worker to the business?

While this is a brief discussion of Employee vs. Independent Contractor status, except in the clearest cases, most situations will involve a case by case analysis to ensure that the Independent Contractor remains an Independent Contractor.

If you are interested in discussing the details of your Employee vs. Independent Contractor decision, feel free to contact Mr. Cooke at (312) 497-9002 or by email at "gc@cookeslaw.com". In many cases, Mr. Cooke can quote a flat fee for a paticlular specialized agreement.

Mr. Cooke has worked with clients to determine whether hiring personnel as independent contractors will achieve client goals and he has prepared a wide variety of independent contractor agreements

Mr. Cooke's fee is $300.00 per hour.