{"id":4618,"date":"2025-03-25T15:04:43","date_gmt":"2025-03-25T14:04:43","guid":{"rendered":"https:\/\/useme.com\/en\/blog\/?p=4618"},"modified":"2025-08-11T10:50:50","modified_gmt":"2025-08-11T08:50:50","slug":"independent-contractor-guide-taxes-compliance-definitions","status":"publish","type":"post","link":"https:\/\/useme.com\/en\/blog\/independent-contractor-guide-taxes-compliance-definitions\/","title":{"rendered":"Independent contractor guide: taxes, compliance, and important definitions"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_79_2 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Table of contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/useme.com\/en\/blog\/independent-contractor-guide-taxes-compliance-definitions\/#What_is_an_independent_contractor\" >What is an independent contractor?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/useme.com\/en\/blog\/independent-contractor-guide-taxes-compliance-definitions\/#Examples_of_independent_contractors\" >Examples of independent contractors<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/useme.com\/en\/blog\/independent-contractor-guide-taxes-compliance-definitions\/#Why_hire_an_independent_contractor\" >Why hire an independent contractor?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/useme.com\/en\/blog\/independent-contractor-guide-taxes-compliance-definitions\/#Paying_for_independent_contractors\" >Paying for independent contractors<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/useme.com\/en\/blog\/independent-contractor-guide-taxes-compliance-definitions\/#How_Useme_helps\" >How Useme helps<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/useme.com\/en\/blog\/independent-contractor-guide-taxes-compliance-definitions\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<p><span style=\"font-weight: 400;\">If you&#8217;re hiring independent contractors in the U.S., this guide will help you understand and control their legal status, tax obligations, benefits, and how to stay compliant.<\/span><\/p>\n<div class=\"responsive-table-wrapper\">\n<table class=\"responsive-table aligncenter\">\n<tbody>\n<tr>\n<td>\n<h3><span style=\"font-weight: 400;\">Key takeaways<\/span><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This guide explains how to hire independent contractors in the U.S. while staying compliant with tax and labor laws.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Key risks include misclassification, which can result in financial penalties and legal disputes.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">To stay compliant: use written contracts, apply the Economic Realities Test, and issue Form 1099-NEC for payments over $600.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Hiring independent contractors offers cost savings, flexibility, and access to specialized skills. The guide covers U.S.-centric laws, state-specific compliance, and international contractor challenges.<\/span><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p><strong>Before diving into the details, here are some essential terms used throughout this article:<\/strong><\/p>\n<div class=\"responsive-table-wrapper\">\n<table class=\"responsive-table aligncenter\">\n<tbody>\n<tr>\n<td><b>Term<\/b><\/td>\n<td><b>Description<\/b><\/td>\n<\/tr>\n<tr>\n<td><b>Independent contractor<\/b><\/td>\n<td><span style=\"font-weight: 400;\">An individual who provides services to a company under a contract but isn&#8217;t considered an employee. They pay their taxes and don&#8217;t receive employee benefits.<\/span><\/td>\n<\/tr>\n<tr>\n<td><b>Self-employed<\/b><\/td>\n<td><span style=\"font-weight: 400;\">A general term for anyone working for themselves, including freelancers, independent contractors, and small business owners.<\/span><\/td>\n<\/tr>\n<tr>\n<td><b>Freelancer<\/b><\/td>\n<td><span style=\"font-weight: 400;\">A person who takes on project-based work for multiple clients, often in creative or technical fields (e.g., designers, copywriters, programmers). They may operate as independent contractors or as sole proprietors.<\/span><\/td>\n<\/tr>\n<tr>\n<td><b>Gig worker<\/b><\/td>\n<td><span style=\"font-weight: 400;\">Someone who performs short-term, task-based jobs (gigs), often through digital platforms like Uber and DoorDash. Their work is typically transactional and platform-dependent.<\/span><\/td>\n<\/tr>\n<tr>\n<td><b>Sole proprietorship<\/b><\/td>\n<td><span style=\"font-weight: 400;\">It is the simplest type of business \u2013 one person runs it and is fully responsible for its debts.<\/span><\/td>\n<\/tr>\n<tr>\n<td><b>Partnership<\/b><\/td>\n<td><span style=\"font-weight: 400;\">A business structure where two or more people run a business together and share ownership, profits, and responsibilities for debts.<\/span><\/td>\n<\/tr>\n<tr>\n<td><b>Limited Liability Company (LLC)<\/b><\/td>\n<td><span style=\"font-weight: 400;\">A business structure that protects its owners (members) from personal liability and offers flexible tax benefits. It&#8217;s a popular choice for self-employed professionals.<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p><span style=\"font-weight: 400;\">As you can see in the table, not all self-employed individuals work the same way. Now, let\u2019s look at how working with independent contractors works.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_is_an_independent_contractor\"><\/span><b>What is an independent contractor?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The<\/span><a href=\"https:\/\/www.irs.gov\/businesses\/small-businesses-self-employed\/independent-contractor-defined\" target=\"_blank\" rel=\"noopener\"> <span style=\"font-weight: 400;\">Internal Revenue Service<\/span><\/a><span style=\"font-weight: 400;\"> (IRS) defines independent contractors as <\/span><b>individuals who control how they do their work, while the hiring company only decides on the final result<\/b><span style=\"font-weight: 400;\">. Independent contractors sometimes set their schedules, choose clients, and use their own tools or equipment. Because of this, they are responsible for handling their taxes and benefits.<\/span><\/p>\n<h3><b>Independent contractor vs. employee<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">The biggest difference between an employer-employee relationship exists between an independent contractor and an employee <\/span><b>controls<\/b><span style=\"font-weight: 400;\">. Employers decide how, when, and where employees work. They also provide benefits, follow labor laws, and withhold taxes from paychecks.<\/span><\/p>\n<p><b>Independent contractors, on the other hand, work on their terms.<\/b><span style=\"font-weight: 400;\"> They choose their schedules, clients, and tools. Some independent contractors may work for multiple businesses in a year.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Others stay with the same company long-term but still maintain their independent contractor status. The key factor is whether the business controls how the work is done or just the final result.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Misclassifying an employee&#8217;s status as an independent contractor can lead to serious legal and financial penalties. The IRS uses the <\/span><span style=\"font-weight: 400;\">Economic Realities<\/span> <span style=\"font-weight: 400;\">Test<\/span><span style=\"font-weight: 400;\"> to determine worker status.<\/span><\/p>\n<h3><b>Economic Realities Test<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">The IRS and the U.S. Department of Labor use the<\/span><a href=\"https:\/\/www.dol.gov\/agencies\/whd\/fact-sheets\/13-flsa-employment-relationship\" target=\"_blank\" rel=\"noopener\"> <span style=\"font-weight: 400;\">Economic Realities Test<\/span><\/a><span style=\"font-weight: 400;\"> to decide whether someone is an independent contractor. The main question is: <\/span><b>is the worker economically dependent on the company, or are they running their own business?<\/b><\/p>\n<p><span style=\"font-weight: 400;\">To make that decision, several factors are considered:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Profit or loss<\/b><span style=\"font-weight: 400;\"> \u2013 Can workers make business decisions (like setting rates, accepting or declining work, or hiring help) that affect their earnings?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Business investment<\/b><span style=\"font-weight: 400;\"> \u2013 Does the worker invest in their own tools, materials, or business growth (like marketing or expanding their client base)?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Work relationship<\/b><span style=\"font-weight: 400;\"> \u2013 Is the work temporary or project-based rather than ongoing or permanent?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Control<\/b><span style=\"font-weight: 400;\"> \u2013 Does the worker control how the work is done without being micromanaged by the company?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Role in the business<\/b><span style=\"font-weight: 400;\"> \u2013 Is the work something the company depends on daily, or is it an extra service that\u2019s not part of their core operations?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Skill and initiative<\/b><span style=\"font-weight: 400;\"> \u2013 Does the worker bring specialized skills and use them independently to grow their own business?<\/span><\/li>\n<\/ul>\n\n<h3><b>Risks of misclassifying an independent contractor<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Misclassifying an independent contractor as an employee \u2013 or vice versa \u2013 can lead to serious legal and financial consequences for businesses. The Internal Revenue Service (IRS) and the U.S. Department of Labor (DOL) actively monitor worker classifications to make sure businesses follow tax laws and the Fair Labor Standards Act (FLSA) regulations.<\/span><\/p>\n<blockquote><p>&#8220;The Economic Realities Test is used to determine worker status [<a class=\"_1fga8jh0 _1be38o0\" href=\"https:\/\/www.dol.gov\/agencies\/whd\/flsa\/misclassification\" data-eventactiontitle=\"Open Anchor Link\" target=\"_blank\" rel=\"noopener\">DOL Economic Realities Test<\/a>].&#8221;<\/p><\/blockquote>\n<h4><b>Consequences of misclassification<\/b><\/h4>\n<p><span style=\"font-weight: 400;\">If a business misclassifies a worker, it may face:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Financial penalties<\/b><span style=\"font-weight: 400;\"> \u2013 the IRS may impose fines and require the company to pay back taxes, including Social Security and Medicare taxes that were not withheld.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\"><strong>Unpaid benefits<\/strong> \u2013 workers may demand benefits such as health insurance, unemployment insurance, and workers&#8217; compensation, which are required for employees.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Legal disputes<\/b><span style=\"font-weight: 400;\"> \u2013 misclassified workers can file lawsuits for unpaid minimum wage, overtime pay, or benefits.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Government audits<\/b><span style=\"font-weight: 400;\"> \u2013 the IRS, Department of Labor, and state labor departments may audit the company, which can result in further penalties.<\/span><\/li>\n<\/ul>\n<h4><b>How to avoid misclassification<\/b><\/h4>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Follow the<\/span><a href=\"https:\/\/www.dol.gov\/agencies\/whd\/fact-sheets\/13-flsa-employment-relationship\" target=\"_blank\" rel=\"noopener\"> <span style=\"font-weight: 400;\">Economic Realities Test<\/span><\/a><span style=\"font-weight: 400;\"> to determine if a worker qualifies as an independent contractor.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Use a clear written contract to define the scope of work and the contractor\u2019s independence.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Ensure the contractor controls their work, schedule, and owns their equipment.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Consult a tax professional or legal expert if unsure about worker classification.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Wrong worker classification can cost you. Do it right to avoid legal and financial trouble.<\/span><\/p>\n<h4><span class=\"_1vwisb38\" data-testid=\"youchat-text\"><strong>State-specific compliance requirements<\/strong><\/span><\/h4>\n<p>U.S. states have their own rules for classifying independent contractors. For example:<\/p>\n<ul>\n<li><strong>California:<\/strong> Uses the ABC test (<a class=\"_1fga8jh0 _1be38o0\" href=\"https:\/\/www.dir.ca.gov\/dlse\/faq_independentcontractor.htm\" data-eventactiontitle=\"Open Anchor Link\" target=\"_blank\" rel=\"noopener\">California Department of Industrial Relations<\/a>).<\/li>\n<li><strong>New York:<\/strong>\u00a0<a class=\"_1fga8jh0 _1be38o0\" href=\"https:\/\/dol.ny.gov\/independent-contractors\" data-eventactiontitle=\"Open Anchor Link\" target=\"_blank\" rel=\"noopener\">NY Department of Labor<\/a>.<\/li>\n<li><strong>Massachusetts:<\/strong>\u00a0<a class=\"_1fga8jh0 _1be38o0\" href=\"https:\/\/www.mass.gov\/service-details\/massachusetts-independent-contractor-law\" data-eventactiontitle=\"Open Anchor Link\" target=\"_blank\" rel=\"noopener\">Massachusetts Independent Contractor Law<\/a>.<\/li>\n<\/ul>\n<p>Always check your state\u2019s labor department for the latest requirements. For federal guidance, see <a class=\"_1fga8jh0 _1be38o0\" href=\"https:\/\/www.irs.gov\/businesses\/small-businesses-self-employed\/independent-contractor-self-employed-or-employee\" data-eventactiontitle=\"Open Anchor Link\" target=\"_blank\" rel=\"noopener\">IRS Worker Classification<\/a>\u00a0and\u00a0<a class=\"_1fga8jh0 _1be38o0\" href=\"https:\/\/www.dol.gov\/agencies\/whd\/flsa\/misclassification\" data-eventactiontitle=\"Open Anchor Link\" target=\"_blank\" rel=\"noopener\">DOL Misclassification<\/a>.<\/p>\n<h4><span class=\"_1vwisb38\" data-testid=\"youchat-text\"><strong>What to do if you\u2019ve already misclassified a worker<\/strong><\/span><\/h4>\n<ul class=\"_1vwisb37\">\n<li class=\"f7g24p0\" translate=\"no\">Conduct a worker classification audit using the Economic Realities Test.<\/li>\n<li class=\"f7g24p0\" translate=\"no\">Reclassify the worker as an employee if necessary.<\/li>\n<li class=\"f7g24p0\" translate=\"no\">Pay any back taxes and settle unpaid benefits.<\/li>\n<li class=\"f7g24p0\" translate=\"no\">Consult a legal or tax professional for guidance.<\/li>\n<li class=\"f7g24p0\" translate=\"no\">Consider the IRS Voluntary Classification Settlement Program (VCSP) for reduced penalties.<\/li>\n<\/ul>\n<h3><b>Independent contractors vs. freelancers, gig workers and more<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Independent contractors, freelancers, and<\/span><a href=\"https:\/\/www.irs.gov\/businesses\/gig-economy-tax-center\" target=\"_blank\" rel=\"noopener\"> <span style=\"font-weight: 400;\">gig workers<\/span><\/a><span style=\"font-weight: 400;\"> all fall under the category of self-employed individuals, legally entitled but their work structures, legal responsibilities, and income sources differ. Understanding these differences helps you handle contracts, taxes, and compliance more easily.<\/span><\/p>\n<p><b>While all freelancers and gig workers are independent contractors, not all contractors fit these categories<\/b><span style=\"font-weight: 400;\">. Freelancers typically provide specialized, project-based services (e.g., writers, designers, developers), often working with multiple clients. Gig workers, on the other hand, take on short-term, on-demand jobs through platforms like Uber and DoorDash.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Look at this table to compare the most common types of <a href=\"https:\/\/useme.com\/en\/blog\/independent-contractor-vs-self-employed\/\" target=\"_blank\" rel=\"noopener\">self-employment<\/a> and business structures in the U.S. You&#8217;ll see key differences in taxes, liability, and payment methods.<\/span><\/p>\n<div class=\"responsive-table-wrapper\">\n<table class=\"responsive-table aligncenter\">\n<tbody>\n<tr>\n<td><\/td>\n<td><b>Type of work<\/b><\/td>\n<td><b>Formal business structure<\/b><\/td>\n<td><b>Income Tax<\/b><\/td>\n<td><b>Legal liability<\/b><\/td>\n<td><b>Form of payment\u00a0<\/b><\/td>\n<td><b>Control over work<\/b><\/td>\n<\/tr>\n<tr>\n<td><b>Independent contractor<\/b><\/td>\n<td><span style=\"font-weight: 400;\">Contract-based work for companies<\/span><\/td>\n<td class=\"column-center\"><span style=\"font-weight: 400;\">\u274c<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Self-reported (Form 1099)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Personal<\/span><\/td>\n<td><span style=\"font-weight: 400;\">*Typically invoice or bank transfer<\/span><\/td>\n<td><span style=\"font-weight: 400;\">High control over work, within contract guidelines<\/span><\/td>\n<\/tr>\n<tr>\n<td><b>Self-employed<\/b><\/td>\n<td><span style=\"font-weight: 400;\">Any self-employed activity<\/span><\/td>\n<td class=\"column-center\"><span style=\"font-weight: 400;\">\u274c<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Self-reported<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Personal<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Invoice \/ depends on structure<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Full control over work and business operations<\/span><\/td>\n<\/tr>\n<tr>\n<td><b>Freelancer<\/b><\/td>\n<td><span style=\"font-weight: 400;\">Creative work\/project-based<\/span><\/td>\n<td class=\"column-center\"><span style=\"font-weight: 400;\">\u274c<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Self-reported<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Personal<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Project-based contracts<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Full control over work execution<\/span><\/td>\n<\/tr>\n<tr>\n<td><b>Gig worker<\/b><\/td>\n<td><span style=\"font-weight: 400;\">Short-term tasks<\/span><\/td>\n<td class=\"column-center\"><span style=\"font-weight: 400;\">\u274c<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Self-reported<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Personal<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Platform-based payments<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Limited control; follows platform policies<\/span><\/td>\n<\/tr>\n<tr>\n<td><b>Sole proprietorship<\/b><\/td>\n<td><span style=\"font-weight: 400;\">One-person business<\/span><\/td>\n<td class=\"column-center\"><span style=\"font-weight: 400;\">\u2705<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Taxed on owner<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Personal<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Business income<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Full control but with financial liability<\/span><\/td>\n<\/tr>\n<tr>\n<td><b>Partnership<\/b><\/td>\n<td><span style=\"font-weight: 400;\">Business with partners<\/span><\/td>\n<td class=\"column-center\"><span style=\"font-weight: 400;\">\u2705<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Taxed on partners<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Partners<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Profit sharing<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Shared control, depends on partnership agreement<\/span><\/td>\n<\/tr>\n<tr>\n<td><b>LLC<\/b><\/td>\n<td><span style=\"font-weight: 400;\">Limited liability company<\/span><\/td>\n<td class=\"column-center\"><span style=\"font-weight: 400;\">\u2705<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Option to tax on LLC or owners<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Limited<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Salary + dividends<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Owners have operational control but follow legal requirements<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p><i><span style=\"font-weight: 400;\">*Independent contractors typically receive payments through <\/span><\/i><b><i>invoices<\/i><\/b><i><span style=\"font-weight: 400;\"> and <\/span><\/i><b><i>bank transfers<\/i><\/b><i><span style=\"font-weight: 400;\">, sometimes checks, or freelance platforms, but the exact method depends on the agreement with their client.<\/span><\/i><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Examples_of_independent_contractors\"><\/span><b>Examples of independent contractors<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Independent contractors bring specialized skills to businesses on a project or contract basis, all while staying in control of their schedules, methods, and tools. Businesses hire them for their expertise without long-term commitments. Here\u2019s how they work across different roles:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Project-based consulting<\/b><span style=\"font-weight: 400;\"> \u2013 experts in business, finance, and marketing provide strategic guidance based on defined goals.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Service providers<\/b><span style=\"font-weight: 400;\"> \u2013 accountants, tax specialists, and legal professionals offer compliance and advisory services.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Creative professionals<\/b><span style=\"font-weight: 400;\"> \u2013 writers, graphic designers, and video producers create content with full autonomy over their processes.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Tech specialists<\/b><span style=\"font-weight: 400;\"> \u2013 software developers and IT consultants build solutions using their own tools and methodologies.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Administrative and support roles<\/b><span style=\"font-weight: 400;\"> \u2013 virtual assistants and customer service providers handle operational tasks independently.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Education and training providers<\/b><span style=\"font-weight: 400;\"> \u2013 coaches and trainers design and deliver specialized programs.<\/span><\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Why_hire_an_independent_contractor\"><\/span><b>Why hire an independent contractor?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Hiring independent contractors is a great way to save money, stay flexible, and bring in specialized skills when you need them.<\/span><\/p>\n<h3><b>Benefits of hiring independent contractors<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Save money<\/b><span style=\"font-weight: 400;\"> \u2013 you don\u2019t have to pay payroll taxes, health insurance, or retirement contributions. Independent contractors take care of their own taxes and benefits, which helps you cut costs.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Stay flexible<\/b><span style=\"font-weight: 400;\"> \u2013 you can scale your team up or down depending on project needs. There\u2019s no need to keep a full-time employee when the workload changes.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Get specialized skills<\/b><span style=\"font-weight: 400;\"> \u2013 independent contractors bring expertise that you might not need all the time. This is perfect for short-term projects that require niche knowledge.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Less paperwork<\/b><span style=\"font-weight: 400;\"> \u2013 you don\u2019t have to handle payroll taxes, unemployment insurance, or benefits. This makes compliance and HR management much easier.<\/span><\/li>\n<\/ul>\n<blockquote>\n<p style=\"text-align: left;\"><span style=\"font-weight: 400;\">Independent contractors offer great benefits, but remember \u2013 correctly classifying your workers as independent contractors is key to avoiding legal trouble.<\/span><\/p>\n<\/blockquote>\n<h2><span class=\"ez-toc-section\" id=\"Paying_for_independent_contractors\"><\/span><b>Paying for independent contractors<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">When you hire an independent contractor, ensure you handle payments correctly. Unlike employees, contractors take care of their own taxes and benefits. You don\u2019t need to withhold payroll taxes or offer perks like health insurance.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Here are some of the most common ways independent contractors charge for their services:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Hourly or daily rates<\/b><span style=\"font-weight: 400;\"> \u2013 some contractors track their time and charge per hour or per day, especially for ongoing projects.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Fixed project fees<\/b><span style=\"font-weight: 400;\"> \u2013 many contractors prefer a set price per project, no matter how long it takes. This is common in creative work, consulting, and development.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Per unit of work<\/b><span style=\"font-weight: 400;\"> \u2013 in some fields, contractors charge per deliverable, like per word (writers), per design (graphic designers), or per consultation (coaches and consultants).<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Retainers<\/b><span style=\"font-weight: 400;\"> \u2013 a contractor may charge a recurring monthly fee for ongoing services. For example, a business might pay a marketer or legal advisor a set amount each month for specific hours.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Upfront or partial payments<\/b><span style=\"font-weight: 400;\"> \u2013 some contractors, especially when working with new clients, request a deposit before starting work.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Most contractors send <\/span><b>invoices<\/b><span style=\"font-weight: 400;\"> that outline the service provided, total cost, and payment deadline only the result. Discussing payment details upfront helps avoid confusion and ensures smooth collaboration.<\/span><\/p>\n<h3><b>Tax forms and compliance<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">When paying independent contractors, you must follow<\/span><a href=\"https:\/\/www.irs.gov\/businesses\/business-tax-account\" target=\"_blank\" rel=\"noopener\"> <span style=\"font-weight: 400;\">IRS rules<\/span><\/a><span style=\"font-weight: 400;\"> to stay compliant. Here are the key tax forms you should know about:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Form W-9<\/b><span style=\"font-weight: 400;\"> \u2013 always ask the contractor to fill out a W-9 form before making any payments. This form provides their taxpayer identification number (TIN) for tax reporting. Keep this form in your records for at least four years in case of any future inquiries from the contractor or the IRS.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Form 1099-NEC<\/b><span style=\"font-weight: 400;\"> \u2013 if you pay a contractor more than $600 in a year, you must send them a 1099-NEC form by January 31 of the following year. You need to send this form to both the contractor and the IRS.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Form 1096<\/b><span style=\"font-weight: 400;\"> \u2013 if you file 1099-NEC forms on paper, you must also submit Form 1096 to the IRS. This form serves as a summary of all the information returns you&#8217;re filing.<\/span><\/li>\n<\/ul>\n<blockquote><p><span style=\"font-weight: 400;\">Since independent contractors handle their own taxes, you don\u2019t withhold Social Security, Medicare, or income tax from their payments.<\/span><\/p><\/blockquote>\n<h3 class=\"_1vwisb33\"><strong>Common challenges when hiring international contractors<\/strong><\/h3>\n<p><span class=\"_1vwisb38\" data-testid=\"youchat-text\">Hiring globally opens up a vast talent pool, but it also introduces a unique set of challenges. Navigating these issues proactively is essential to protect your business and maintain a healthy working relationship with your contractors. <\/span><span class=\"_1vwisb38\" data-testid=\"youchat-text\">Here are the most common challenges to be aware of:<\/span><\/p>\n<ul class=\"_1vwisb37\">\n<li class=\"f7g24p0\" translate=\"no\"><strong>Compliance with local labor laws<\/strong> \u2013 each country has its own distinct labor and tax regulations. A worker considered a contractor in the U.S. might be classified as an employee elsewhere, exposing your company to unforeseen legal issues, fines, and compliance requirements in that country.<\/li>\n<li class=\"f7g24p0\" translate=\"no\"><strong>Payment methods and currency exchange <\/strong>\u2013 cross-border payments can be complex. Businesses must deal with fluctuating currency exchange rates, high international transfer fees, and potential delays caused by banking systems. Choosing a payment method that is both cost-effective for you and convenient for the contractor is crucial.<\/li>\n<li class=\"f7g24p0\" translate=\"no\"><strong>Tax compliance and documentation <\/strong>\u2013 while you don&#8217;t withhold U.S. taxes, you still have documentation requirements. Non-U.S. contractors must typically complete a\u00a0Form W-8BEN to certify their foreign status. Failing to collect the right forms can lead to compliance issues with the IRS.<\/li>\n<li class=\"f7g24p0\" translate=\"no\"><strong>Intellectual Property (IP) and data security \u2013<\/strong>\u00a0IP laws vary significantly between countries. Your contract must contain a robust, enforceable clause that clearly defines who owns the work product. Protecting confidential business information across borders also requires careful legal consideration.<\/li>\n<li class=\"f7g24p0\" translate=\"no\"><strong>Cultural and communication barriers <\/strong>\u2013 differences in time zones, languages, and cultural norms regarding work-life balance, feedback, and deadlines can lead to misunderstandings and impact project timelines and collaboration.<\/li>\n<li class=\"f7g24p0\" translate=\"no\"><strong>Verification of credentials <\/strong>\u2013 it can be more difficult to verify a contractor&#8217;s professional licenses, insurance coverage, and educational qualifications when they are based in another country.<\/li>\n<li class=\"f7g24p0\" translate=\"no\"><strong>Misclassification risks <\/strong>\u2013 the risk of misclassification exists on both sides. An incorrect classification can lead to penalties not only from U.S. authorities like the IRS but also from the tax and labor authorities in the contractor&#8217;s home country.<\/li>\n<li class=\"f7g24p0\" translate=\"no\"><strong>Administrative and payment delays<\/strong> \u2013 managing invoices, contracts, and other documents across different legal systems can increase administrative overhead. Furthermore, international banking holidays and processing times can cause unexpected payment delays, affecting contractor satisfaction.<\/li>\n<\/ul>\n<h3><b>Paying international contractors<\/b><\/h3>\n<p><span style=\"font-weight: 400;\"><a href=\"https:\/\/useme.com\/en\/blog\/how-to-pay-independent-contractors\/\" target=\"_blank\" rel=\"noopener\">Paying contractors<\/a> in different countries takes a little more planning, but with the right approach, it\u2019s simple. Here\u2019s what you need to consider:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Rates vary by country<\/b><span style=\"font-weight: 400;\"> \u2013 contractors set their rates based on their living costs and market conditions in their country. It\u2019s important to agree on pricing upfront to avoid misunderstandings.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Choosing the right payment method<\/b><span style=\"font-weight: 400;\"> \u2013 bank transfers, Wise, and PayPal are standard options, but some contractors may prefer local payment solutions.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Currency exchange rates &amp; fees<\/b><span style=\"font-weight: 400;\"> \u2013 if you\u2019re paying in a different currency, keep in mind that exchange rates and transfer fees can affect the final amount the contractor receives.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Paying international contractors doesn\u2019t have to be a hassle. The right payment method and smooth invoicing can save time and keep everything compliant.<\/span><a href=\"https:\/\/useme.com\/en\/for-employer\/\"> <b>Useme<\/b><\/a><b> makes it easy to pay contractors securely and in their preferred currency.<\/b><a href=\"https:\/\/cta-eu1.hubspot.com\/web-interactives\/public\/v1\/track\/redirect?encryptedPayload=AVxigLKhPvojyUs18mw04kMeUYJZK45u96glQrSzN%2B2lFrlq1OpTjudSTYWu6Q7QPKJii5G6DBkG31pdGouMVjuTmWbJGMHeJwHY0jNHeLQBFE4Nb24%3D&amp;webInteractiveContentId=221027620030&amp;portalId=27198211\" target=\"_blank\" rel=\"noopener\"><br \/>\n<img decoding=\"async\" style=\"height: 100%; width: 100%; object-fit: fill;\" src=\"https:\/\/hubspot-no-cache-eu1-prod.s3.amazonaws.com\/cta\/default\/27198211\/interactive-221027620030.png\" alt=\"Useme - create account-1\" \/><\/a><\/p>\n<h3>Formal requirements for working with independent contractors<\/h3>\n<p><span style=\"font-weight: 400;\">Hiring independent contractors is easier than hiring employees, but there are still a few important steps to follow. Clear agreements and proper documentation help you avoid legal risks, prevent misclassification under the<\/span><a href=\"https:\/\/www.dol.gov\/agencies\/whd\/flsa\" target=\"_blank\" rel=\"noopener\"> <span style=\"font-weight: 400;\">Fair Labor Standards Act (FLSA)<\/span><\/a><span style=\"font-weight: 400;\">, and stay compliant with IRS regulations.<\/span><\/p>\n<h4>1. You need a written contract<\/h4>\n<p><span style=\"font-weight: 400;\">A written contract is essential when working with an independent contractor. It defines the independent contractor relationship and protects both the employer&#8217;s business and the contractor. A strong independent contractor agreement should include:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Scope of work<\/b><span style=\"font-weight: 400;\"> \u2013 a detailed description of services provided, deadlines, and deliverables.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Payment terms<\/b><span style=\"font-weight: 400;\"> \u2013 how the money paid will be structured (hourly, per project, or retainer).<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Right to control<\/b><span style=\"font-weight: 400;\"> \u2013 clarification that the contractor maintains control over how the work is performed.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Confidentiality &amp; non-disclosure<\/b><span style=\"font-weight: 400;\"> \u2013 if the contractor handles sensitive business information, include a clause for protection.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Intellectual property rights<\/b><span style=\"font-weight: 400;\"> \u2013 define who owns the work created. Without a clear agreement, the contractor may retain rights to their work.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Termination terms<\/b><span style=\"font-weight: 400;\"> \u2013 conditions under which the contract can be ended early.<\/span><\/li>\n<\/ul>\n<h4><b>2. Check their business license, insurance, and TIN<\/b><\/h4>\n<p><span style=\"font-weight: 400;\">Certain industries require independent contractors to have:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>A business license<\/b><span style=\"font-weight: 400;\"> \u2013 required for contractors in legal, financial, and construction industries.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Own insurance<\/b><span style=\"font-weight: 400;\"> \u2013 many business owners require contractors to have liability or professional indemnity insurance.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Taxpayer Identification Number (TIN)<\/b><span style=\"font-weight: 400;\"> \u2013 businesses must request Form W-9 to obtain the contractor&#8217;s TIN for tax reporting.<\/span><\/li>\n<\/ul>\n<h4><b>3. Keep records of payments and agreements<\/b><\/h4>\n<p><span style=\"font-weight: 400;\">Even though businesses don&#8217;t need to withhold taxes for independent contractors, they must:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Issue Form 1099-NEC for payments over $600 per year.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Track employment tax compliance, ensuring the contractor files their self-employment tax.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Keep records of business expenses, invoices, and payment receipts for IRS audits.<\/span><\/li>\n<\/ul>\n<h4><b>4. Consider local governments and international differences<\/b><\/h4>\n<p><span style=\"font-weight: 400;\">Hiring independent contractors from different local governments or from outside the U.S. requires additional considerations:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Follow local labor laws<\/b><span style=\"font-weight: 400;\"> \u2013 some countries have stricter worker classification rules.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Use international payment platforms<\/b><span style=\"font-weight: 400;\"> \u2013 consider fees, taxes withheld, and payment timelines.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Confirm eligibility requirements<\/b><span style=\"font-weight: 400;\"> \u2013 some international contractors must complete Form W-8BEN to confirm non-U.S. tax status.<\/span><\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"How_Useme_helps\"><\/span><b>How Useme helps<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Managing payments and contracts for independent contractors can be time-consuming and complex.<\/span><a href=\"https:\/\/useme.com\/en\/for-employer\/\"> <span style=\"font-weight: 400;\">Useme<\/span><\/a><span style=\"font-weight: 400;\"> simplifies the process by providing a secure and efficient way to handle freelancer payments, ensuring compliance and ease of use for both businesses and independent contractors.<\/span><\/p>\n<p><b>Why Useme is a great solution:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Pay freelancers securely <\/b><span style=\"font-weight: 400;\">\u2013 we make sure freelancers get paid on time while keeping your business protected.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>No more admin hassle <\/b><span style=\"font-weight: 400;\">\u2013 forget about formalities like signing contracts or gathering data for the agreement.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Smooth international payments<\/b><span style=\"font-weight: 400;\"> \u2013 easily pay contractors in different countries without worrying about their preferred currency, without the hassle of exchange rates and transfer issues.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Secure and reliable contracts<\/b><span style=\"font-weight: 400;\"> \u2013 we provide a transparent contract that protects your interests, enforces deadlines, and ensures freelancers meet all agreed terms, so your projects run smoothly.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Contracts made simple <\/b><span style=\"font-weight: 400;\">\u2013 we ensure your freelancers deliver the right tax forms. Our secure contracts protect your business and help your projects run smoothly.<\/span><\/li>\n<\/ul>\n<blockquote><p>\u201dI had a great experience with Useme. Customer support answered my questions via phone (my case was a bit unique), the process was straightforward, and I received messages with the deal status at every stage. Everything was pretty easy! \u2013 <span class=\"CDS_Typography_appearance-default__96c1da CDS_Typography_prettyStyle__96c1da CDS_Typography_heading-xs__96c1da styles_consumerName__xKr9c\" data-consumer-name-typography=\"true\">Maya Kislykh\u201d<\/span><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">Useme allows companies to work globally with freelancers and independent contractors while keeping financial processes streamlined and compliant. Plus, on <\/span><a href=\"https:\/\/useme.com\/en\/contractors\/\"><span style=\"font-weight: 400;\">Useme Jobs<\/span><\/a><span style=\"font-weight: 400;\">, you can find verified freelancers ready to work on your projects.<\/span><a href=\"https:\/\/cta-eu1.hubspot.com\/web-interactives\/public\/v1\/track\/redirect?encryptedPayload=AVxigLL6%2B7R%2Bw2Tg98kdv8ilIDmjtipaUHv%2F7r7h5s9A%2BBHw1GfDOiwuHvsnBJYSplp3jxDX15AzwfZ%2B5hkMNTxm402fLsCk84M6a5d5dnNqBYr5o%2FoHbTF3qOK0bIN1hDfZBJOTfwHUHQdbSY9hqoyFFKKBfGe71CNV4M4pqCq445BzqRvFg7k%3D&amp;webInteractiveContentId=221014299878&amp;portalId=27198211\" target=\"_blank\" rel=\"noopener\"><br \/>\n<img decoding=\"async\" style=\"height: 100%; width: 100%; object-fit: fill;\" src=\"https:\/\/hubspot-no-cache-eu1-prod.s3.amazonaws.com\/cta\/default\/27198211\/interactive-221014299878.png\" alt=\"Useme - read more\" \/><\/a><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span><b>Conclusion<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Independent contractors provide businesses with flexibility, cost savings, and specialized expertise. However, companies must properly classify workers, follow IRS tax regulations, and comply with labor laws to avoid fines and legal disputes.<\/span><\/p>\n<p><strong>Key takeaways:<\/strong><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Independent contractors are not employees.<\/b><span style=\"font-weight: 400;\"> They manage their taxes, benefits, and work schedules.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Misclassification can lead to serious legal and financial consequences.<\/b><span style=\"font-weight: 400;\"> Businesses should follow the Economic Realities Test and IRS guidelines to determine worker status.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>A well-structured contract is essential.<\/b><span style=\"font-weight: 400;\"> Defining project scope, payment terms, and intellectual property rights protects both parties.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Tax compliance is the responsibility of both the contractor and the business.<\/b><span style=\"font-weight: 400;\"> Employers must issue Form 1099-NEC for payments over $600, while contractors must pay self-employment tax.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>International contractors require additional considerations.<\/b><span style=\"font-weight: 400;\"> Companies should check local labor laws and tax requirements, and use secure payment methods.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Working with independent contractors doesn\u2019t have to be complicated. <\/span><b>\u2192<\/b><a href=\"https:\/\/useme.com\/en\/users\/create-account\/\"> <b>Create a free account on Useme<\/b><\/a><b> and streamline your payments easily!<\/b><\/p>\n<hr \/>\n<p><em>This guide is for informational purposes only and does not constitute legal or tax advice. For advice specific to your situation, consult a qualified professional. This guide focuses on U.S. laws and compliance requirements. If you are hiring contractors in other countries, consult local regulations.<\/em><\/p>\n<p><i><span style=\"font-weight: 400;\">Information verified by a lawyer (LL.M.) Szymon Czerny.<\/span><\/i><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Hiring independent contractors can give your business more flexibility, lower costs, and access to specialized talent. But to do it right, you need to understand the rules and responsibilities. Misclassification, tax compliance, and legal requirements can create serious risks if you don&#8217;t follow the proper procedures.<\/p>\n","protected":false},"author":28,"featured_media":4619,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"quote","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","content-type":"","inline_featured_image":false,"_lmt_disableupdate":"no","_lmt_disable":"","footnotes":""},"categories":[25],"tags":[],"class_list":["post-4618","post","type-post","status-publish","format-quote","has-post-thumbnail","hentry","category-for-employers","post_format-post-format-quote"],"modified_by":"\u017baneta","_links":{"self":[{"href":"https:\/\/useme.com\/en\/blog\/wp-json\/wp\/v2\/posts\/4618","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/useme.com\/en\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/useme.com\/en\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/useme.com\/en\/blog\/wp-json\/wp\/v2\/users\/28"}],"replies":[{"embeddable":true,"href":"https:\/\/useme.com\/en\/blog\/wp-json\/wp\/v2\/comments?post=4618"}],"version-history":[{"count":15,"href":"https:\/\/useme.com\/en\/blog\/wp-json\/wp\/v2\/posts\/4618\/revisions"}],"predecessor-version":[{"id":5220,"href":"https:\/\/useme.com\/en\/blog\/wp-json\/wp\/v2\/posts\/4618\/revisions\/5220"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/useme.com\/en\/blog\/wp-json\/wp\/v2\/media\/4619"}],"wp:attachment":[{"href":"https:\/\/useme.com\/en\/blog\/wp-json\/wp\/v2\/media?parent=4618"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/useme.com\/en\/blog\/wp-json\/wp\/v2\/categories?post=4618"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/useme.com\/en\/blog\/wp-json\/wp\/v2\/tags?post=4618"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}