Employee vs Contractor Infographic

When it comes to determining an employee from an independent contractor, many business owners are unsure how to identify a worker's classification. The table below highlights some of the differences between an employee and an independent contractor.

 EMPLOYEE
Versus
CONTRACTOR
 W-2 Form
W2 AND 1099
1099-Misc Form
 Works for mainly
1 company at a time
COMPANIES
 May do work for multiple
companies at a time
 Employer
controls income
INCOME
 Income profit or loss is
determined by the individual
 Paid on a consistent
basis (e.g. hourly,
weekly, monthly)
1099 Icons-08
 Paid per invoice
submission or upon
completion of job
 May be eligible
for overtime pay
 1099 Icons-10
 Is not eligible
for overtime pay
 Income, Unemployment,
Social Security &
Medicare taxes are
withheld from wages paid
 TAXES
 No taxes are withheld from
payment for services
 Can qualify for company
and government benefits
 1099 Icons-16
 They are responsible for
seeking and arranging
their benefits
 Part of the company's
daily workings with a
continuous ongoing
relationship and
integrated responsibilities
 relationship
 Hired when needed
 Follows guidelines
to how, where and
when work is to
be completed
 gUIDELINES
Establishes
how and when
work is to be
completed 
Is trained by the
company to
perform their job
TRAINING
Already trained
and is skilled to
perform the job
Is provided tools
to do the job
1099 Icons-09
Brings own tools,
equipment and
materials to work site
Is subject to firing,
discipline and rewards
FIRING
Is responsible
for self employment
Is able to terminate
their services at any time
WORK AGREEMENT-1
Is required to
complete contracted work
May be entitled
to reimbursement
of qualified
business expenses
BUSINESS EXPENSES
They are responsible
for business costs
and travel expenses
Interested in company’s
success and profitability
of company
INVESTED IN COMPANY GROWTH
Not directly affected
by economic
status of company
Usually has standard
set work days and hours
1099 Icons-07
Creates personal work
schedule to meet job
requirements/deadlines

 

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At TEG, we understand it can be confusing to determine if a worker is an independent contractor or an employee. For assistance, please contact us at 717-569-2900 or click the button below.

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