Best Business Practices for Photographers [46]
Response. Contractors make investments in equipment to further their own businesses (office computers, cell phones, light meters, and so on), and from time to time they use these to provide services to me. Contractors are not dependent on me for the existence of their own businesses; rather, they complete a varying portion of their tasks at my office for the sake of convenience.
Factor 16: Realization of Profit or Loss. Can the worker make a profit or suffer a loss? A worker who can realize a profit or suffer a loss is generally an independent contractor. For example, if the worker is subject to a real risk of economic loss due to significant investments or liability for expenses, such as salary payments to unrelated employees, that factor indicates that the worker is an independent contractor. The risk that a worker will not receive payment for his or her services, however, is common to both independent contractors and employees and thus does not constitute a sufficient economic risk to support treatment as an independent contractor.
Response. No profit or loss from a contractor's performance or lack thereof could be a possibility at this time related to their own contractors or employees, given that no current contractor has employees or contractors themselves. However, it is possible for a contractor to make investments in his or her own business or engage in liability for expenses, for which we are not responsible. This possibility could have an adverse impact on the contractor's profit (or loss) during the course of his or her tax year.
Factor 17: Working for More Than One Firm at a Time. Can the worker work for more than one client at a time? If a worker performs services for a number of unrelated persons or firms at the same time, the worker is generally considered an independent contractor.
Response. Current contractors not only work for more than one client, but in fact they can work for direct competitors of mine.
Factor 18: Making Service Available to the General Public. Does the worker offer services to the public? The fact that a worker makes his or her services available to the general public on a regular and consistent basis indicates an independent contractor relationship.
Response. My contractors not only provide their services to me, but they provide photographic services (as both a photographer and an assistant) to the general public as well.
Factor 19: Right to Discharge. Can the worker be fired? The right to discharge a worker is a factor indicating that the worker is an employee and the person possessing the right is the employer. An employer exercises control through the threat of dismissal, which causes the worker to obey the employer's instructions. An independent contractor, on the other hand, cannot be fired so long as the independent contractor produces the result that meets the contract specifications.
Response. No contractor can be fired provided that he or she meets the contract specifications. In the event that a contractor fails to produce the results outlined in his or her contract, the contract may not be renewed.
Factor 20: Right to Terminate. Can the worker quit without incurring liability? If the worker has the right to end his or her relationship with the person for whom the services are performed at any time without incurring liability, an employer/employee relationship exists.
Response. A contractor has the right to terminate his or her contract with proper notice but cannot quit without incurring liability.
So ask yourself the 20 questions/factors to ensure you don't end up on the wrong end of an IRS or Department of Labor inquiry,