The amount of control the employer has over the worker determines whether the worker is an employee or an independent contractor
When you hire 1099 contractors, add and pay them as vendors (not as employees). For more information, see Pay a 1099 contractor as a vendor.
| Employee | Independent Contractor |
|---|---|
| The employer controls what work must be done and how. | Self-employed workers control how the work gets done. |
| The employer supplies the tools to complete the work. | Self-employed workers usually provide their own tools. |
| The worker is an employee who works, usually exclusively, for the employer. | The worker is self-employed and has an independent business serving multiple clients. |
| Employers pay employment taxes on an employee's behalf. | Self-employed workers pay their own employment taxes. |
| At year-end, employees receive a W-2 form. | At year-end, self-employed workers receive a 1099, unless they are incorporated |
Still not sure? See Is your worker a 1099 contractor or a W-2 employee?
See IRS Publication 15, Circular E: Employer's Tax Guide for more info.
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