The IRS has no set score that determines if you are one or the other. These are just 20 questions that they use as guidelines to help determine which category you fall into.
- Who decides where, when and how the work is done: you, or the person paying you? (If you’re a consultant, it’s you.)
- Does the client train you, or do you bring your own talents and skills to the job? (If the client has to provide training or instruction, it’s an indication you are an employee.)
- Are you integrated into the client’s business, and therefore subject to direction, or do you provide a unique service? (Are you treated like an employee or like a consultant?)
- Are you required to perform the services yourself or can you assign them to an employee or subcontractor? (Employees generally can’t get someone to do their work for them.)
- Who hires and supervises the people necessary to get the job done? Is it you, or the client receiving services from you? (Do the people do the work for you or your client?)
- Do you provide services on a continuing basis, or for separate and discrete projects? (Consultants tend to move from project to project.)
- Do you have to work set hours, or can you complete the work any time as long as it’s by deadline? (Consultants usually decide when they want to work on a given project.)
- Are you required to devote your attention to the client’s work full time, or can you do work for other clients too, provided you meet deadlines and other contractual terms? (Employees usually have just one job.)
- Do you have to work on site, even if there are alternatives? (Consultants often work from home or their own offices.)
- Do you have to perform the job in a specific order or sequence, or can you decide how to do it as long as it gets done? (Employees have to worry about doing things the way the boss says compared with consultants who often don’t, as long as they produce results.)
- Do you have to file regular oral or written progress reports? (Consultants aren’t always required to.)
- Are you paid regularly, or by the project?
- Are you reimbursed for out-of-pocket expenses, or are these considered part of your overhead? (Employees tend to get reimbursed.)
- Who furnishes the tools and equipment for a job? (Consultants often use their own equipment.)
- Who invests in the equipment and facilities needed to perform the work?
- Who shoulders the burden of a financial loss or realizes the profit from a project? (Employees usually get paid regardless of whether a project is successful.)
- Do you work for more than one firm or person at a time? (Employees do not usually have multiple clients/jobs.)
- Are your services available only to one employer, or do you make them available to the general public?
- Can you be fired at any time, or only if you fail to perform a contracted service?
- Can you quit at any time, or only if the client breaches your contract?
