Legal Question in Business Law in Alabama

Re: Contractor vs. Employee

In addition to the routine federal withholding and income tax issues, also consider the issue of legal liability. Businesses, in some situations, may not be liable for the actions of a contractor. Whereas, businesses can be liable for the actions of an employee in many instances. You may want to explore this issue to see if your wife's proposed business would be suitable for using contractors versus employees or both. Refer to the helpful links on Lawguru for more information or feel free to call our office.

Thank you for your question.

Re: Contractor vs. Employee

Basically it is a question of supervision and control. If someone works for you on a regular basis for a set rate and does work by a standard set of rules, then they are probably going to be held to be an employee and would get a W-2. If you hire someone to do a particular job and do not supervise every detail of how they do their job, then they might be a contractor. Examples of this are building contractors and sub-contractors who do specific types of jobs as they come up, but are not a regular employee. More facts are needed in your case to determine if your wifes proposed business would lend itself to contract labor. You might try going to the IRS website and seeing what you can find out there.