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Employee vs. Contractor

When it comes to working from home as a Virtual Assistant there are two routes in which you can take in terms of your tax status.You can be an Independent Contractor or an Employee.


An employee holds a permanent position with the company, whether it is part time or full time. They are on the business’ payroll, and typically earn a paycheck at the end of each pay period. They usually do not control the hours in which they work.  They can work from home or work in an office. Many times if they telecommute the employer will supply the equipment that you need. But the thing that really differentiates you from an Independent Contractor is that the employer controls the way in which you do your job, your working hours, the procedures you take,  and they give you a title within the company, and they pay you either hourly or salary withholding taxes and paying your FICA taxes.

Independent Contractor

Independent contractors, on the other hand, are generally only used by a company when their specific skill sets are needed. This can be long term, such as is the case with Virtual Assistants or they may be hired on a short term basis, or even per project, hired multiple times by the same company to perform a specific task or group of tasks.

Independent contractors are not offered a benefits package, supplies or direction on how, when, where and why each task is to be performed. They may work with several different companies to earn a living and the companies that contract with them do not pay their FICA taxes or withhold income taxes. They are able to set their own hours, and must purchase their own tools to complete the job.

There have been laws created that separate the two forms of job titles, which protect both the employee and the contractor. Choosing which way to go for employment is not just based on what you need to support yourself or what you want to call yourself. There are very specific guidelines set up by the IRS to determine your status. If you want to be an Independent Contractor study the IRS guidelines and make sure that you follow them, and make sure those you contract with follow them so that lines are not crossed.

About Stephanie Watson

Mom | Wife | Virtual Assistant | Content Strategist
Stephanie has been working from home for over 20 years as a virtual assistant, template bender, and content writer. She's currently transitioning to business coach. You can learn more about her at her website

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