The IRS developed 20 factors used to determine whether a worker is an independent contractor. In general, at least 11 of these factors must show independent contractor status under the common law tests.

		Employee	Independent Contractor
1.	Is the individual’s work vital to the company’s core business?	Employee activities are integrated with the organization’s business operations.	IC services are typically limited to non-essential business activities.
2.	Did you train the individual to perform tasks in a specific way?	Employees are usually taught the specific work procedures that they are expected to follow and must comply with any other employer requirements with regard to these activities.	ICs are generally considered “experts” in their field and, as such, can determine which work methods are most appropriate. Additionally, they are typically held accountable only for outcomes, not the means with which they are achieved.
3.	Do you (or can you) instruct the individual as to when, where and how the work is performed?
4.	Do you (or can you) control the sequence or order of the work performed?
5.	Do you (or can you) set the hours of work for the individuals?	Employees generally work on a schedule determined by their employer.	ICs can work whatever hours they choose, provided that agreed-upon deadlines are met.
6.	Do you (or can you) require the individual to perform the work personally?	Employees must do the tasks for which they were hired themselves.	ICs are free to delegate to their own staff or subcontract the work to others.
7.	Do you (or can you) prohibit the individual from hiring, supervising, and paying assistants?
8.	Does the individual perform regular and continuous services for you?	Employees typically have an open-ended relationship with a company, even if the work is performed at irregular intervals.	ICs work on a project by project basis, each time with a new contract.
9.	Does the individual provide services on a substantially full-time basis to your company?	Employees are usually expected to devote all working hours to their employer.	ICs do not spend so much time with any one company that they are restricted from doing projects for others and, in fact, generally work for multiple clients concurrently.
10.	Is your company the sole or major source of income for the individual?
11.	Is the work performed on your premises?	Employees are ordinarily required to work on-site.	ICs are free to work off-site, such as in a home office.
12.	Do you (or can you) require the individual to submit regular reports, either written or oral?	Employees may be asked to provide status or activity reports on a regular basis.	ICs are responsible for producing a final deliverable and are not, therefore, required to provide interim reports.
13.	Do you pay the individual by the hour, week or month?	Employees are usually paid at fixed intervals.	ICs are generally paid for their results, not the amount of time worked.
14.	Do you pay the individual’s travel and business expenses?	Employees who incur work-related expenses are typically reimbursed by their employer.	ICs are usually expected to incorporate out-of-pocket expenses into their project fee rather than be directly reimbursed for them.
15.	Do you furnish tools or equipment for the individual?	Employees generally use company-provided supplies.	ICs are expected to own and use their own supplies.
16.	Does the individual have a significant investment in facilities, tools, or equipment?	Employees typically use their company’s facilities, tools and equipment.	ICs incur expenses related to work space, equipment, etc., like any other business owner.
17.	Can the individual realize a profit or loss from his or her services to your company?	Employees can usually expect steady paychecks.	ICs run the risk of non-payment if a project is not completed according to the specifications detailed in the contract.
18.	Does the individual make his or her services available to the general public?	Employees do not typically position and market themselves as service providers.	ICs publicize their services to a wide range of potential clients via direct mail, advertising, etc.
19.	Can the individual terminate the relationship without liability?	Employees can quit at any time and can typically be released “at will” by their employer.	ICs are legally obligated to complete projects according to contract provisions and can only be dismissed if they fail to do so.
20.	Do you have the right to discharge the individual at any time?

Because of the legal ramifications of this issue, discuss it with your professional advisor and/or contact the Internal Revenue Service.

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