In Ohio and other states, your employer would be required to withhold income taxes on your paychecks, as well as contribute toward Social Security and Medicare funds. These rules are different for independent contractors, however. How do you know if you’re an independent contractor? According to the Internal Revenue Service, independent contractors work independently of a traditional employer. They may work alone or provide services exclusively to certain companies, but not be considered actual employees of that company.
If you’re an independent contractor, you may also refer to yourself as “self-employed.” Some examples of independent contractors include personal accountants, tax advisors, roofing contractors, independent stenographers and others who make their services available to the public or to companies. How would your work and pay differ from that of company employees? If, for example, you write blogs for a company that provides online content, the company would most likely not dictate your work hours or strategy, especially if you work at home. You would enter into an agreement with the company over how you are paid – whether by the hour or by the assignment.
Your tax obligations would also be different from regular employees. It would be a wise idea to set aside a portion of your earnings for taxes, since they would not be automatically taken out by an employer.
Working as an independent contractor may give rise to unique legal issues. You may face confusion over the type of work to be completed, pay discrepancies or issues involving unscrupulous customers. To address these issues and ensure their best interests are represented, independent contractors often seek legal advice. The information in this blog is not to be substituted for the counsel of a lawyer.