IRS Common Law Test
Independent Contractors

IRS Common Law Test - Independent Contractors

  • can earn a profit or suffer a loss from the activity
  • is told where to work by the hiring firm
  • offers his or her services to the general public
  • can be fired by the hiring firm
  • furnishes the tools and materials needed to do the work
  • is paid by the job or by the hour
  • works for more than one firm at a time
  • has a continuing relationship with the hiring firm
  • invests in equipment and facilities
  • pays his or her own business and traveling expenses
  • has the right to quit without incurring liability
  • receives instructions from the hiring firm
  • is told in what sequence or order to work by the hiring firm
  • receives training from the hiring firm
  • performs the services personally
  • hires and pays assistants
  • sets his or her own working hours
  • works full-time for the hiring firm
  • provides regular oral or written progress reports to the hiring firm, or
  • provides services that are an integral part of the hiring firm's day-to-day operations.

Qualifications Independent Contractors

Most people who qualify as independent contractors follow their own trade, business or profession, they are in business for themselves. This is why they are called independent contractors. They earn their incomes from their own independent businesses instead of depending upon any one employer.

Examples of Independent Contractors are professionals with their own practices,doctors, lawyers and accountants. For example, dentists who have their own practices are independent business persons offering dental services to the public; although you pay your dentist or doctor for work, he or she is not your employee.

A worker does not have to be a professional, however, to be an Indedendent Contractor. A person you hire to paint your house can be in business for himself or herself and qualify as an IC.

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