Step 2 – Verify the Contractorīefore hiring the services of a third party, it’s best to verify the credentials of the individual or business by looking up all reviews, and past work, along with conducting necessary background checks.įor entities, it’s a bit harder to perform a background check. This form is required to be stored by the client for a period of four years although is not required to be filed with the IRS. This will identify themselves and require them to give their Employer Identification Number (EIN) or Social Security Number (SSN) before performing any work. IRS Form W-9 should be given to the independent contractor and completed before signing any agreement. Step 1 – Independent Contractor Completes IRS Form W-9 Once a contractor is found, it is time to write an agreement. Once an individual or company has decided that services are needed, they will need to determine which independent contractor works best for them. Independent contractors must use IRS Form 1099 – MISC and file at the end of the year to file their taxes with the Internal Revenue Service (IRS). Specifically, the following professions are independent contractors by right under IRS Rules: If the individual is paid a salary, must adhere to a specific schedule, and is dictated what to do in every facet of their workday, they will most likely be considered an employee. Generally speaking, if an individual is paid on a per-project or task manner, they will most likely be considered an independent contractor. Ultimately, an independent contractor is an individual who has their own boss and sets their own rules to justify how they work and their output.
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