Examining the Legal and Financial Responsibilities of the Independent Contractor and His Employers

Author

Janice Wells, Fontbonne College

Year of Award

1988

Degree

Master of Business Administration (MBA)

College

College of Business & Professional Studies

Degree Program

Business

Department

Business Administration

Keywords

entrepreneur, independent contracting, taxes, penalties

Abstract

For hundreds of years, the American dream has been to own one's own business. Many American's have grown tired of punching the mechanical timekeeper and answering to a superior who is no more trained, knowledgeable or intelligent than his subordinates. Often times, a superior's position may be the result of strategically playing the political games. If the games are played well and the timing is right, knowledge and intelligence may become secondary. A title may be easily obtained without very little consideration being given to the inequities of such a decision.

Although many Americans long to be self-reliant and free of the inequities which tend to plaque corporations, most people don't have the nerve to pursue an independent career. Because statistics show that approximately 75% of small businesses fail,’many would be entrepreneurs hesitate or avoid taking the. plunge. The thought of leaving the comfort of the known and plunging into the uncertainty of the unknown becomes quite intimidating. The would-be entrepreneur must find a way to lessen the fear.

One way to do this might be to examine independent contracting. Independent contracting can be less risky and costly than opening a small business in which employees are hired. If the individual has marketable skills and/or talents, he may utilize contracting as means of achieving his independence. He can market himself as an individual who provides a needed and valuable service. He can chose his assignments, hours and work location. He becomes the controller of his destiny.

While contracting may offer the freedom and mobility often dreamed of, it is extremely important to understand the regulations which govern such a career. Although contracting requires an initial capital outlay which is quite minimal, an individual may be confronted with a host of charges if he is improperly classified. If he chooses to classify himself as a contractor, he must make sure he falls within that classification based on IRS standards.

Hopefully, this thesis will allow the reader to realize the significance of understanding the difference between the "employee" and the "contractor." An attempt will be made to paint a clear and accurate picture of those rules governing the employer/contractor relationship and the consequences of not adhering to these rules. Once the reader understands the responsibilities of both the contractor and the employer, he may better determine whether or not contracting is a feasible endeavor worth pursuing.

Document Type

Restricted Thesis

Recommended Citation

Wells, Janice, "Examining the Legal and Financial Responsibilities of the Independent Contractor and His Employers" (1988). All Theses, Dissertations, and Capstone Projects. 513.
https://griffinshare.fontbonne.edu/all-etds/513