What is an independent contractor?

Individuals who have full control of how the work will be performed and what work will be performed qualify as independent contractors. If a formalized employer-employee relationship exists, the individual can’t be classified as an independent contractor. Independent contractors operate across a variety of industries and offer an array of services.

What is an independent contractor agreement? 

Just like an employment contract, an independent contractor agreement lays out the terms and conditions of an independent contractor’s services. An independent contractor agreement will cover the scope of work, contractual obligations, and duration when the work will be performed.

The main difference between an employment contract and an independent contractor agreement is that the independent contractor agreement ensures there’s no confusion surrounding worker classification, tax payments, and tax obligations for either party. As a legally binding contract, it demonstrates to the IRS that both parties understand that there isn’t an employer-employee relationship. 

Are independent contractors eligible for paid sick leave? 

Generally, independent contractors aren’t eligible for paid sick leave, because they’re only paid for the time they spend working. Similarly, independent contractors don’t receive paid time off. However, some states offer paid family and medical leave programs that allow self-employed individuals, like freelancers and independent contractors, to opt into coverage.

How to file taxes as an independent contractor 

Independent contractors are required to file an annual income tax and pay estimated taxes quarterly. Independent contractors file annual income tax independently using a 1099 form and are required to pay a self-employment tax in addition to income tax. Self-employment tax refers to the Social Security and Medicare tax for self-employed workers.