With contract employment on the rise, an increasing number of businesses are hiring specialized workers on a contingent basis in order to help with completion of a project, or to fill in for an absent employee. These contract assignments can last anywhere from weeks to years at a time. By hiring these contract workers, companies enjoy the benefits of hiring a team of qualified professionals on an as-needed basis, maintaing a flexible workforce and, in many cases, helping their bottom line. While bringing in contract employees can provide businesses with some much-needed relief during projects or busy seasons, it can also raise confusion when it comes to classifying them for tax purposes. IRS fines and penalties for incorrectly classifying employees are steep, but can be avoided by knowing the differences between employee classifications.
