Module 4 – Employee vs. Contractor

ASSESSMENT CRITERIA: Determines contractor or employee status.

  • DEGREE OF CONTROL: Indicators include responsibility for planning time, place, and manner of work performed, supervision, hours to be worked, and form of pay.
  • OWNERSHIP OF TOOLS: Investment in tools, including value of tools, maintenance, insurance, rental responsibility.
  • CHANCE OF PROFIT OR LOSSES: The degree to which an individual can make a profit, risks incurring losses, covers operating costs.
  • INTEGRATION: The extent to which the producer integrates the payer’s activities to his own commercial activities, rather than the opposite.
  • BASIC TEST: To what degree is the “contractor” different than a typical “employee” in each of the above areas? One immediate indicator is whether or not you have more than one client, or no completion date for a project.

My business plan involves owning and operating a chiropractic clinic which would firmly place me in the category of contractor based on the following:

Degree of control: I will be responsible for the planning and execution of all elements of my business including operating hours, form of payment, location, layout and manner of work to be performed.

Ownership of tools: As the sole business owner I will be responsible for acquiring and maintaining all tools required for business such as computers and chiropractic tables.

Chance of profit or losses: As the sole proprietor the profits or losses incurred will fall directly under my control.

Integration: I, the producer, and my commercial activities will be linked directly to the payer’s activities.

Basic Test: If all goes well I will have far more than one client and any projects or business goals will be under my prerogative.

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