— Internal Revenue Service —
Of most concern is the IRS, which has developed a 20-factor test for determining whether someone is an employee for whom you must pay payroll taxes:
- Do you have the right to control how the worker does the work?
- Do you give the worker extensive instructions on how, when or where to do the work?
- Do you provide the worker with training about procedures and methods?
- Do you set the working hours of the worker?
- Do you have financial control over the worker?
- Do you reimburse the worker for business expenses?
- Do you absorb the profit or loss from the worker’s performance?
- How do you and the worker see your relationship?
- Does the worker receive benefits, like health insurance or a retirement plan?
- Do you have a written employment contract which allows you to fire the worker?
- Does the worker have a continuing relationship with your business?
- Is the worker paid by the hour?