An independent contractor is a person or entity engaged in a work performance agreement with another entity as a nonemployee.
 | | Term of the Day | Words to Know | | |  | | Independent Contractor | | An independent contractor is a person or entity contracted to perform work for—or provide services to—another entity as a nonemployee. As a result, independent contractors must pay their own Social Security and Medicare taxes. In addition, the entity is not required to provide the contractor with employment benefits, such as health insurance, that they might otherwise be required to provide were the contractor an employee. The payer must correctly classify each payee as either an independent contractor or employee. Another term for an independent contractor is a freelancer. | | Read More » | | Related to "Independent Contractor" | | | | Gig Economy | | In a gig economy, temporary jobs are commonplace and companies tend to hire independent contractors and freelancers instead of full-time employees. | | Read More » | | | Virtual Assistant | | A virtual assistant is an independent contractor who provides administrative services to clients while working outside of the client's office. | | Read More » | | | Self Employment | | A self-employed individual does not work for a specific employer who pays them a consistent salary or wage. | | Read More » | | | Self-Employment Tax | | Self-employment tax is the tax that a small business owner must pay to the federal government to fund Medicare and Social Security. | | Read More » | | | | | | CONNECT WITH INVESTOPEDIA | | | | | | | |
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