Thanks to everyone who replied to my question on this.

Steve

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Thanks to everyone who replied to my question on this.

Steve

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"Steve Pope" <spope33[at]speedymail.org> wrote:

- quote -

It may be "common knowledge" for employers who to want to
categorize people as "independent contractors" to avoid
payroll taxes. From the way it is worded I think they are
trying to distinguish the difference in the mind of the
"employed" not the employer. This distinction is often not
"common knowledge" the employed person until tax time when
they get a 1099-MISC instead of a W-2 and their accountant
gives them a nice big bill for SE tax!

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spope33[at]speedymail.org (Steve Pope) wrote:

- quote -

On a second reading I agree with you that this document is
poorly worded.

First of all, the issue of Self-Employment Tax should be
linked to self-employed individuals, not Independent
Contractors.

Second, the definition of an Independent Contractor should
not, to the best of my knowledge, not include the phrase
"not what will be done" since I interpret that to mean the
end result, the delivered product or service.

Being an independent contractor means I decided the "how"
(or "method") and the "where" and "when", but not the "what
will be done" or "when it must be delivered."

--
Vic Roberts
Replace xxx with vdr in e-mail address.

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spope33[at]speedymail.org (Steve Pope) wrote:

- quote -

I am an employee of a C Corporation which I also own. I am
therefore not self-employed.

When my C Corporation is hired by clients to do consulting
work, the contracts state that the corporation is an
independent contractor and not an employee of the client.

These contracts would have the same clause regarding
"independent contractor" even if I were self-employed and
organized as a Sole Proprietorship.

The two concepts are very different.

--
Vic Roberts
Replace xxx with vdr in e-mail address.

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Steve Pope wrote:

- quote -

None.

- quote -

I know of many one person C Corporations and the one person
executive is an employee, not a sole proprietor. There is no
Schedule C filed by the one-person.

The issue is whether a person you hire to perform services
for you is either an independent contractor or a statutory
nonemployee and therefore is treated as being responsible
for their own employment taxes and reporting their own gross
receipts or the person is a common law employee or a
statutory employee and you both share responsibility for the
employment taxes and you issue a W-2.

I believe the point the IRS is trying to make, is that when
one is operating an unincorporated trade or business solely
owned by one person, that person is self-employed and files
Schedule C or C-EZ. When one offers to perform certain
services for you, the facts and circumstances of each case
will determine whether you have an employee or an
independent contractor. If an independent contractor, then
the independent contractor files tax returns in the same
manner that a sole proprietor files tax returns. You can
hire a sole proprietor to perform work for you and if you
create a certain set of facts, you can find that you have a
common law employee.

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Steve Pope wrote:

- quote -

Just a guess, from reading the document: they are actually
trying to reinforce the distinction between employee and
non-employee, by responding to those who think, "But I'm not
self-employed -- so I must be an employee". They are saying,
"sure, you're not self-employed, you're an independent
contractor -- but you're still not an employee!".

This concept regularly trips up folks such as those who
drive their own cars to deliver daily newspapers to
residences in my area -- they certainly don't think of
themselves as proprietors of their own small business, but
they definitely aren't employees. A document such as the
one you ask about can help clarify this distinction.

-Mark Bole

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Steve Pope wrote:

- quote -

I consider a self employed person to be one needing a
business license and one who holds himself out to the public
as being a separate business.

Therefore a self employed person can be an independent
contractor, whereas all independent contractors are not
subject to business licensing requirements. It's all facts
and circumstances.

One client hired a worker to work in his laundramat along
side the other regular employee. I asked why no taxes taken
out and he replied that she prefers to be an independent
contractor and "pay her own taxes at the end of the years.
AGGGGHHHH!!!! Yea, sure she will.

As to the cite above, this is interesting:

"You are a member of a partnership or limited liability
company that files a Form 1065, U.S. Return of Partnership,
that carries on a trade or business;....."

Looks like IRS is resolving any previous debate over whether
or not LLC members have to pay SE tax.

ChEAr$,
Harlan Lunsord, EA n LA

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Steve Pope wrote:

- quote -

They are the same thing.

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spope33[at]speedymail.org (Steve Pope) wrote:

- quote -

Except that "self employed" often need local business
licenses and independent contractors may not, I can't think
of any time a distinction is made.

- quote -

I think the IRS is making the distinction to indicate to
people that the line between employee and self-employed is
not as clear as we might think it ought to be. For some -
those in independent recognized businesses, it's easy to
tell. But for freelancers it's not always.

But aside from that, they both file Schedule C's and are
otherwise equivalent.

Stu

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The title of the following IRS document suggests that it is
important to distinguish between self-employed individuals
on the one hand, and independent contractors on the other
hand:

http://www.irs.gov/businesses/small/...115041,00.html

(This link was forwarded to me by a friend as part of a
discussion of self-employment issues.)

My question is that while it's common knowledge that it's
important to distinguish between employees and
non-employees, under what circumstances must one further
differentiate the non-employees into self-employed vs.
independent contractors?

Prior to running across this, I considered "independent
contractor" to be a synonym for "self-employed worker"
(either sole proprietor or one-person corporation) but now
I'm not so sure. Do tax examiners make a distinction here,
and apply different rules to the two situation?

Not a question I critically need an answer to, but I find
the title and purpose of this document to be a bit confusing.

Thanks

Steve

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