Business Terms Glossary

Independent Contractor

Definition of Independent Contractor

An Independent Contractor is a person who practices an independent trade, business, or profession in which they offer their services to the public.

The person contracting for their services must have the right to control or direct only the result of the work and not the means and methods of accomplishing the result.

An employer who engages an independent contractor does not have to pay payroll taxes for the contractor. However, incorrectly classifying employees an independent contractors can lead to substantial tax penalties.

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