What is an Independent Contractor?
What types of professions work as Independent Contractors?
In the professional services world, we know that lawyers, doctors, accountants, and others often provide their services to the general public as independent contractors. Depending on the nature of the working relationship and agreement, artists may also be similarly identified as independent contractors.
What is a typical independent contractor working relationship like?
Generally, independent contractors are those who are in business for themselves and control the “when, where, and how” of their work. When hiring an artist as an independent contractor or 1099 vendor, you as the company have little to no control over that individual. As the hiring party, it is important for all agreements and expectations to be clearly laid out in a well-drafted contract such as the working relationship, the contractor’s responsibilities and scope of services, deadline of this project, as well as fees to be paid to them and the 1099 to be issued to them. Keep in mind that you need only issue a 1099 if the contractor meets the $600 IRS threshold over the course of the tax year.
Is there an easy way to create an agreement with an independent contractor?
Pentacle issued a NEW agreement template for independent contractors! Click on the button down below to download!
Factors determining the independent contractor classification
So how can you determine if the artist should be classified as an independent contractor? A number of cumulative factors are to be considered:
- Discretion as to how to produce product or service
- Not subject to supervision
- Self-schedules subject only to the project deadline
- May provide their services to other like-competing organizations
- Invests in their own tools, equipment, and supplies
- Submits an invoice for their services
A number of laws dictate the classification of independent contractors
Federal, state, and local law all attempt to define the boundaries by which an individual should be classified as an independent contractor; however, these laws can change over time and should be referenced based on the organization’s state of establishment. For example, New York State does not exactly define who is an employee and who is an independent contractor; rather the New York State Department of Labor has issued guidance, drawing awareness to the numerous factors that must be considered and you, as the hiring party, should ask yourself several key questions when classifying the worker. For example, how many hours do they work, and who sets those hours? Is the work directly supervised? How is compensation provided, and are business/travel expenses reimbursed? Are there any fringe benefits to be provided? To stay compliant with federal, state, and local requirements, contemplate your working relationship with the individual as well as how their services best support your organization. And do consult legal and tax professionals along the way to help guide your decisions about hiring independent contractors.
Learn more about independent contractors
For more information, reach out to us on LIVE CHAT and we can discuss independent contractors more specifically to your circumstance.
Pentacle remains dedicated to continuing to provide a high level of support to artists during these extraordinary circumstances. Alongside many other key and respected organizations in the field, we have begun accumulating and curating resources for artists and organizations experiencing income loss and other troubles as a result of the COVID-19 crisis. Find our list of resources here.
NEXTSTEPS | 08.20.2021
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