Definition of Independent Contractor

An independent contractor is a self-employed individual who provides services to clients or businesses on a contractual basis. They are not considered employees of the companies they work for and typically operate under their own name or a registered business name. Independent contractors have more flexibility and autonomy compared to employees, as they can choose which projects to work on, set their own schedules, and negotiate their fees directly with clients.

Some key characteristics of independent contractors include:
  1. Control over work: Independent contractors have more control over how, when, and where they perform their work. They are responsible for delivering the agreed-upon results but have the freedom to determine the methods and processes used to achieve those outcomes.
  2. Payment terms: Independent contractors are usually paid on a per-project or per-hour basis, as agreed upon with their clients. They are responsible for invoicing clients and managing their own finances.
  3. Taxes and benefits: Independent contractors are responsible for managing and paying their own taxes, including self-employment tax. They do not receive employee benefits like health insurance, retirement plans, or paid time off from the clients they serve.
  4. Business expenses: Independent contractors must cover their own business-related expenses, such as equipment, office space, and insurance. However, many of these expenses can be deducted from their taxable income.
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