Independent Contractor or Employee? You Better Know!

Many employers erroneously think that they can “hire” individuals as independent contractors simply by having them agree to work under that designation, orally or in writing in the form of a contract.  Nothing could be further from the truth.  There are specific criteria established in Revenue Ruling 87-41 for determining whether one employed is an employee or an independent contractor, leaving the burden of proof encumbent upon the employer to substantiate the worker’s status as an independent contractor.  Commonly known as the “Twenty Factor Test”, these criteria should be reviewed by every employer–as well as every “employee”–whenever there is a question regarding a worker’s status as an independent contractor or as an employee:  the penalties for failing to do so can be severe, including back federal and state employment and income taxes, interest, and thousands of dollars in penalties.

About William Brighenti

William Brighenti is a Certified Public Accountant, Certified QuickBooks ProAdvisor, and Certified Business Valuation Analyst. Bill began his career in public accounting in 1979. Since then he has worked at various public accounting firms throughout Connecticut. Bill received a Master of Science in Professional Accounting degree from the University of Hartford, after attending the University of Connecticut and Central Connecticut State University for his Bachelor of Arts and Master of Arts degrees. He subsequently attended Purdue University for doctoral studies in Accounting and Quantitative Methods in Business. Bill has instructed graduate and undergraduate courses in Accounting, Auditing, and other subjects at the University of Hartford, Central Connecticut State University, Hartford State Technical College, and Purdue University. He also taught GMAT and CPA Exam Review Classes at the Stanley H. Kaplan Educational Center and at Person-Wolinsky, and is certified to teach trade-related subjects at Connecticut Vocational Technical Schools. His articles on tax and accounting have been published in several professional journals throughout the country as well as on several accounting websites. William was born and raised in New Britain, Connecticut, and served on the City's Board of Finance and Taxation as well as its City Plan Commission. In addition to the blog, Accounting and Taxes Simplified, Bill writes a blog, "The Barefoot Accountant", for the Accounting Web, a Sift Media publication.
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