Question

Why is it important to distinguish between an employee and independent contractor?

Answer 1

It is important to distinguish between employee and independent contractor because-

1. Employees are covered under labor any any other laws but contractor are not covered under any such laws.

2. Employees are paid on weekly or monthly basis on any other terms of the company but contractor are paid on completion of work or terms fixed by contractor.

3. When employees are paid for their work then income and other taxes are deducted from their income and while paying to contractor nothing is deducted.

4. Company has more expectations from employees other than the usual work where as contractors are responsible only for particular work assigned. Therefore company has more control on employees than independent contractor.