Independent contractor
Independent contractor
Independent contractor (pronunciation: /ˌɪndɪˈpɛndənt kənˈtræktər/) is a term used in contract law to refer to a person or business which provides goods or services to another entity under terms specified in a contract or within a verbal agreement.
Etymology
The term "independent contractor" is derived from the concept of a contractor being independent, meaning they are not an employee of the company they are providing services for, but operate independently.
Definition
An independent contractor is a natural person, business, or corporation that provides goods or services to another entity under terms specified in a contract or within a verbal agreement. Unlike an employee, an independent contractor does not work regularly for an employer but works as and when required, during which time he or she may be subject to law of agency.
Related Terms
Legal Implications
In the context of employment law, independent contractors differ from employees in that they control the manner and means by which contracted services, goods, or results are achieved. The entity with which the independent contractor contracts will not withhold or pay any taxes on behalf of the contractor, who is responsible for their own self-employment tax and making estimated tax payments.
Tax Implications
In terms of tax law, an independent contractor is considered self-employed and is therefore responsible for self-employment taxes. They are typically not eligible for employee benefits, although they may be eligible for other tax deductions.
External links
- Medical encyclopedia article on Independent contractor
- Wikipedia's article - Independent contractor
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