It is essential that business owners correctly determine whether the individuals providing services are employees or independent contractors. Basically, you must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. You do not generally have to withhold or pay any taxes on payments to independent contractors. Before you can determine how to treat payments you make for services, you must first know

Knowing where you fall matters a lot when it comes to filing your taxes. Specifically, if you’re an employee , the company you’re working for is responsible for withholding taxes throughout the year, as well as costs like the employer’s share of Social Security and unemployment taxes. If you’re an independent contractor , you’ll need to be paying quarterly taxes and will be fully responsible for those additional tax costs. It's not as easy as just looking at how many hours y