![]() How Are Independent Contractor Taxes Different? That could mean accepting credit card payments, using a payment processor like Paypal, or being paid by check. There’s no right or wrong way to set up your payment schedule.īecause you’re typically not paid through an employer’s payroll, you’ll need to have an alternative way to be paid. Or, if you’re paid on a project basis, you might invoice at the end of the project. It’s up to you and the payer to come up with the proper schedule and payment method.įor example, if you’re paid an hourly rate, you might invoice bi-weekly. But as an independent contractor, there are no set rules as to how you are paid. You’re paid on a consistent and regular schedule, like weekly, bi-weekly, or monthly when you're an employee. Some examples of independent contractors include doctors, accountants, lawyers, and people who offer freelance services like web design or copywriting.Īs an independent contractor, you can be a sole proprietor or register as a business like an LLC or a corporation. The line does get blurred, so it’s up to employers to ensure they’re doing the work to understand if the person they’re hiring is considered an independent contractor or an employee. The IRS says that, in general, someone is regarded as an independent contractor if the payer can only direct the result of the work, not where and how it is done. Employers must get this right, or they could face costly fines.Īn independent contractor provides services but isn’t considered an employee - they’re considered self-employed. The IRS is pretty specific about who they consider an independent contractor and who they consider an employee. ![]() ![]() In this guide, we’ll walk you through what you need to know regarding independent contractor taxes. It’s important to understand just what your responsibilities are as an independent contractor so you’re not caught off guard when tax time comes around. While being an independent contractor can be a convenient option, it does make your taxes a little more complex. Some people enjoy the flexibility being an independent contractor brings to their full-time job, and others use it to manage a side gig or two. How to file taxes as an independent contractorīeing an independent contractor can be a career option that fits your lifestyle.
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