Contractor definition and meaning
A contractor is a worker who is hired to complete a business task or job, without being considered a permanent employee. Businesses have fewer compliance and payroll tax obligations when they work with contractors, but being a contractor gives a worker more flexibility.
The IRS has strict guidelines that define who is a contractor and who is an employee. Businesses typically exert more control over employees and have a more enduring relationship. Contractors, who operate more independently, are responsible for paying their own taxes and at year-end. Instead of a W-2, a contractor normally uses Form 1099-NEC to file taxes.
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