How does being an independent contractor work?

An independent contractor is not employed by a business—instead, they work with a business as a third party. Independent contractors typically do not receive the same rights afforded to employees and are responsible for their own retirement plans, insurance and other benefits.

Can you be an independent contractor for your own company?

People who work for themselves or who own their own company are sometimes alternately referred to as self-employed or independent contractors, though there is a difference between the two. In general, all independent contractors are self-employed, but not all self-employed people are independent contractors.

What is an independent contractor organization?

Independent contractors provide goods or services according to the terms of a contract they have negotiated with an employer. Independent contractors are not employees, and therefore they are not covered under most federal employment statutes.

Can a person work as an independent contractor?

Yes. According to U.S. labor law, independent contractors are not employees—they are self-employed and do work for clients on a contract basis. If you do work as an independent contractor, you are technically working for yourself.

What’s the difference between freelancer and independent contractor?

The “independent” in independent contractor simply refers to the fact that the contractor is a non-employee, and is independent of the company they’re doing the contracted work for. Most people who call themselves “freelancers” are considered to be independent contractors by the IRS—the two terms are basically interchangeable.

How is an independent contractor classified by the IRS?

Independent contractors are often referred to as consultants, entrepreneurs, business owners, freelancers, or as self-employed individuals. They work for a number of different clients at any given time and are not an employee of any particular company. The IRS has established certain test to determine if a worker is a contractor or an employee.

Who is an independent contractor in the gig economy?

Independent contractors have become increasingly prevalent in the rise of what has been dubbed “the gig economy.” An independent contractor, or freelancer, is a person or entity contracted to perform work for—or provide services to—another entity as a nonemployee.