Is My Independent Contractor Really An Employee?

Independent contractor really an employee. Getting your international operations up and running quickly with the right staff can be a tall order. Your company must have the appropriate entity structure in place, register payroll properly and be setup to comply with all relevant taxes, benefit requirements, etc.

The reality is that you may need someone in country working on your behalf sooner than you are able to iron out all the details. This is a common situation in which independent contractors are considered, non employees that can begin doing work on your behalf.

However, there are major risks associated with bringing on an independent contractor. Without proper considerations and detailed contractual agreements, you may find that, although you’ve classified your worker as a contractor, the local authorities in country have actually classified him or her as an employee for tax purposes.

How do you avoid this gray area of misclassification? Ensure that you are hiring only true contractors in the first place. Though each country will have specific employment tests, generally speaking, the following guidelines apply to contractors.

Typically, outside of these guidelines, everyone else will be considered an employee, and entitled to all the rights and benefits that come with that status. Where a true contractor relationship does exist, to avoid any complications, it is best to arrange for a detailed contractor agreement to be in place before work actually starts.