Independent Contractor

An independent contractor is a person or entity engaged in a contractual agreement to provide services to another party, often referred to as the client or principal. Unlike employees, independent contractors operate under their own business structure and are responsible for their own taxes, benefits, and operational costs. This distinction is crucial in the context of employment law and taxation, as it affects how both parties manage their obligations and rights.

Independent contractors can work in various industries, including construction, consulting, information technology, and creative fields. They may be hired for specific projects or ongoing work, typically defined by a contract that outlines the scope of services, payment terms, and duration of the engagement. This flexibility allows businesses to scale their workforce according to demand without the long-term commitments associated with full-time employees.

Understanding the role of independent contractors is essential for businesses looking to optimize their workforce strategies. It is also vital for contractors themselves to comprehend their rights and responsibilities, particularly in relation to the Employer of Record (EOR) model, which has gained popularity in recent years.