One of the most important warehouse management tips for any business is knowing and understanding the difference between an employee and a contractor. Misclassification for businesses can result in larger tax bills or penalties for not paying employment taxes or not filing the correct tax forms. Conversely, workers will avoid higher tax bills and lost benefits if they file tax papers using the proper status designation.
Know the Difference
The basics between an employee and a contractor are:
- An employee is instructed on how to do a job correctly and is controlled in the means to do so. A contractor is specifically told what needs to be done, but they do it on their own volition.
- An employee is trained to do a job correctly, while a contractor is given the freedom to get a job done the way they see fit.
- An employee is paid a specific wage no matter what their duties are. A contractor gives the business a specific price or an estimate, that is agreed upon by both parties, before any job is done.
What it All Means
Essentially, an employee is hired-on by the business and conforms to their company creed, goes through any training provided, and they are then expected to perform a work function using the guidelines set forth by the company.
A contractor gets hired-on at a negotiated wage for a specific job, that they will complete using their own experience and their own guidelines, as long as it conforms to safety standards and regulations.
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