Terms and Definitions

What is an independent contractor?

Updated: June 11, 2024

Independent contractor definition and meaning

Independent contractors are self-employed workers that generally complete tasks for a third party. The work an independent contractor completes generally happens at a location not owned by their own business.


More about independent contractors

Independent contractors can operate on their own, or work for a company that offers contract services such as plumbing, catering, window washing, or electrical repair. They may charge a recurring rate or a one-time fee and are typically responsible to manage the cost of their work for each job.


While traditional employees (also called W-2 employees) have taxes withheld from their pay by their employer, independent contractors file and pay their own taxes. Instead of using Form W-2, employers issue independent contractors a Form 1099-NEC (non-employee contractor) to report earnings to the IRS.


You may work with an independent contractor and not even realize it. For example, dentists, veterinarians and auto mechanics can all be independent contractors.

Using independent contractor in a sentence

“I like that, as an independent contractor, I’m able to decide when I work and when I’m on vacation.”

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