![]() How does this person's work get performed? In some ways, this is the most important test. Related: What Obama's Grand Tax 'Bargain' Would Mean for Your BusinessĤ. Freelancers should be able to work where and when they want. ![]() You should avoid having freelancers working from your location or give them specific arrival and departure times. Freelancers can also delegate responsibility to someone else to help get the assignment completed. ![]() Employees are told what to do, but freelancers are told what needs to be done. How much influence can you have over this person's day? The less direction you give to the person the better. The more the freelancer has financial control, the better.ģ. Stay away from providing tools and/or equipment. Avoid paying by time (hourly, daily or weekly), reimbursing expenses, or paying bonuses. When working with freelancers, you should pay a fixed fee for projects and in turn they should have risk of profit or loss on the assignment. The business pays a person a full-time salary for work performed. Do you have financial control over the person doing work? With a W2 employee this is not in question. Related: 5 Reasons the IRS's New Focus on Small Businesses Is Ridiculously EgregiousĢ. Once you know if the individual can be classified as freelancer then you can consider which type of control your business holds over the person, financial or behavioral. If the answer to all these questions is no, you are better off making her a W2 employee. Is this person really a freelancer? Or does she run an independent business that performs a service for multiple companies? Did she incorporate? Does she have business insurance, a business bank account, an actual office? Does she have a website, a logo, marketing materials? For how many other customers does she provide services? These are the questions you need to answer in order to determine if the person is really a freelancer. Here are four questions to ask to help you mitigate the risks involved with worker misclassification:ġ. Our software is designed to monitor worker misclassification, and thus to provide our clients with tools to prevent potentially costly mistakes. From clients like Lockheed Martin and Omnicom to companies just starting out, one of the biggest issues all businesses face is compliance. At Work Market, we work with companies of all sizes to manage contractors at scale.
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