While some independent contractors set an hourly rate for their work, others are paid per job or project. And like the typical freelancer, independent contractors can work with multiple companies during the same period of time.
What are independent contractor services?
An independent contractor is a self-employed person or entity contracted to perform work for—or provide services to—another entity as a nonemployee. As a result, independent contractors must pay their own Social Security and Medicare taxes. Another term for an independent contractor is “freelancer.”
What does it mean to be an independent contractor?
If you are a business owner or contractor who provides services to other businesses, then you are generally considered self-employed. For more information on your tax obligations if you are self-employed (an independent contractor), see our Self-Employed Tax Center. I hire or contract with individuals to provide services to my business
Do you have to file taxes as an independent contractor?
For more information on your tax obligations if you are self-employed (an independent contractor), see our Self-Employed Tax Center. If you are a business owner hiring or contracting with other individuals to provide services, you must determine whether the individuals providing services are employees or independent contractors.
Do you have to keep track of payments to independent contractors?
You must keep track of payments you make to independent contractors each year. You do not need to withhold FICA taxes ( Social Security and Medicare tax) from these payments.
When do independent contractors need to pay their own Super?
As well as paying their own tax, independent contractors may need to make their own superannuation contributions. There are exceptions to this, such as when a contractor is hired wholly or principally for labour. In this case, the person that hired them is responsible for paying their superannuation.