Business: IRS Rules for Independent Contractors

IRS Rules - Are you an employee or independent contractor


20 common law-factors to determine whether workers are employees or independent contractors

(see Internal Revenue manual, 4600 Employment Tax Procedure, Exhibit 4640-1).

Workers are generally employees if they:

  1. Must comply with employer's instructions about the work.
  2. Receive training from or at the direction of the employer.
  3. Provide services that are integrated into the business.
  4. Provide services that must be rendered personally.
  5. Hire, supervise, and pay assistants for the employer.
  6. Have a continuing working relationship with the employer.
  7. Must follow set hours of work.
  8. Work full-time for an employer.
  9. Do their work on the employer's premises.
  10. Must do their work in a sequence set by the employer.
  11. Must submit regular reports to the employer.
  12. Receive payments of regular amounts at set intervals.
  13. Receive payments for business and/or traveling expenses.
  14. Rely the employer to furnish tools and materials.
  15. Lack a major investment in facilities used to perform the service.
  16. Cannot make a profit or suffer a loss from their services.
  17. Work for one employer at a time.
  18. Do not offer their services to the general public.
  19. Can be fired by the employer.
  20. May quit work at any time without incurring liability.