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The question of classifying someone as an employee or contractor is more complex than you think. If you are an employer and you incorrectly classify someone, it can cost you a great deal of money and even more headaches.
The benefits to the employer in classifying a worker as a contractor are obvious:
You can see why an employer would be naturally inclined to want to classify EVERYONE he hires as a contractor.
In general an employee works for a particular organization and that company has the authority to dictate what that employee does and the manner in which he/she must do it. An independent contractor, on the other hand, is a person that the employer hires for services and only pays for the results of the labor. The employer, or contracting party, does not manage or direct the manner in which the work gets done.
This sounds simple in theory, but it can be quite complicated in reality. There are many examples of potential jobs where answering the question may be difficult. For this article, I will list and explain the IRS's 20 factor test which it uses to determine whether any given worker should be classified as a contractor or an employee.